For various reasons, services provided to, and for, older people are becoming more important and are moving up the policy agenda. In the past ten years or so, we have seen unprecedented media coverage of issues specifically relevant to older people, such as long-term care and pensions. Policy makers have responded with, for example, the Royal Commission on Long Term Care in 1999 and, more recently, the Pensions Commission in 2006. Although some recommendations from the former were implemented, there is still disquiet about both the availability of long-term care and how it is funded, as the recommendations of the 2006 Wanless Review on Social Care, commissioned by the King’s Fund, make clear. Differences in policies between England and Scotland, in particular, have left open the question of how to fund long-term care.

In response to the Pensions Commission, there has been considerable debate about reform to the state and private pension systems. A Bill to reform the state pension system is currently passing through Parliament, and the Government has proposed introducing a new national pensions savings scheme of Personal Accounts. However, since the economic impact of an ageing population will be on both pensions and long-term care, it is important that they are considered together. At present projections are produced separately and models that try to simulate the likely consequences of changes to one system do not consider its effects on other systems. Yet older people experiences and resources result from a combination of all policy choices and for the first time we will examine, using modelling techniques, the combined effects of changes to each system on the lives and resources of older people.

Policy debate over pensions and long-term care is taking place within the context of uncertainty over future levels of disability, informal (unpaid) care, utilisation of long-term care services and costs of long-term care. Demand for long-term care is driven by a wide range of factors and family circumstances, all of which may affect estimates of expenditure and utilisation, as previous projections by members of this Work Package have shown. A number of these drivers are being investigated in-depth by other Work Packages in this study. Integration of the findings of these Work Packages with analyses and model development in this Work Package will enable projections to be produced on a wider range of scenarios on trends in external drivers of demand for long-term care and in the availability of resources.

Aims

There are several aims associated with this Work Package. These are:

to produce projections of informal (unpaid) care and use of long-term care by older people in future years and investigate how different trends in drivers of demand for such care might affect demand into the future
to produce unified projections of public and private expenditure on pensions and long-term care through linking macro-simulation and micro-simulation models
to investigate the distributional and other implications of policy changes in these areas.

Method

This Work Package builds on the success of existing models, each used extensively within their own fields, specifically,

the Personal Social Services Research Unit’s (PSSRU) macro-simulation projections model of long-term care.
the dynamic micro-simulation model of care charges, CARESIM, developed by Professor Ruth Hancock, which produces projections for or up to 20 years into the future.
the Pensions Policy Institute’s (PPI) suite of three flexible simulation models that investigate different aspects of current pension policy and alternative reform options.

These models are described in detail in publications by the three institutions. For examples of previous publications see Documents, reports and other publications.

The Work Package is developing the models for three distinct purposes: to improve the functioning of each model, to ensure consistency so that unified compatible projections of public and private expenditure on pensions, disability benefits and care services under reforms of pensions and/or long-term care funding systems can be produced, and to incorporate projections or trends from other Work Packages into the models. Analyses of GHS and ELSA data on kinship, care, incomes and services are being undertaken to improve the models. These are focusing on the following areas:

the factors affecting receipt of unpaid care, using 2002 ELSA data, with a view to modelling the availability of living children in the PSSRU model
the intensity of unpaid care, using 2002 ELSA data on provision of unpaid (co-resident) care, with a view to including intensity of informal care in the PSSRU model
transitions into and out of receipt of unpaid and paid care, using longitudinal analysis of the first two waves of ELSA (with appropriate collaboration with Work Package 4), to inform future scenarios of informal and formal care
the relationship between low income and the receipt of long-term care services, using the 2001/2 GHS, to improve modelling of the relationship between incomes and demand for services.

Modelling techniques and information used in each individual model is also being used to enhance the other models. For example:

Links with the PPI model are enabling the development of a means of bringing in new generations of older people to CARESIM so extending its time horizon.
Methodology and assumptions from CARESIM/PSSRU models are being used to incorporate modelling of Housing Benefit, Council Tax Benefit and disability benefit receipt into the PPI models.
The PPI model is drawing on the CARESIM/PSSRU grossing system to scale up the private household population to the total population by housing tenure and income as well as age, gender and marital status.

Linkages

By drawing on insights from the other Work Packages, cross fertilisation between models will lead to improvements in each individual model, increasing the quality and flexibility of modelling in the areas of pensions, informal care and long-term care. Specifically,

projected future number of older people from Work Package 1 are being used to estimate the level of uncertainty due to mortality and as variants to the official GAD population projections currently used in the PSSRU, PPI and CARESIM models;
trends in the future prevalence of disability from Work Package 2 are being used as scenarios to investigate the impact of changes in the prevalence of chronic conditions and disability on benefit receipt and long-term care;
projections of kin availability, generated by Work Packages 3 and 4, are being used to investigate the impact of changing kinship patterns on demand for long-term care.

Within this Work Package there are also linkages, in particular,

trends in future housing tenure, savings and incomes of older people, and the consequent liability of older people to contribute user charges for care, from the CARESIM and PPI models, are being incorporated into the PSSRU model, to examine the impact of potential changes in pensions policy and in long-term care funding arrangements on public and private expenditure on long-term care.

Outputs

This Work Package is producing projections of future public and private expenditure on pensions and long-term care to 2030 and beyond. There are different kinds of planned outputs, as follows:

a set of projections investigating the impact of alternative trends in mortality, disability, household type and the availability of informal care, based on the in-depth work carried out in the other Work Packages and related analyses and improvements to the models in this Work Package
a set of projections under different policy options, including a unified analysis of pension reforms and long-term care financing reforms, produced in a consistent, joined-up manner. This will show the trade-offs between public and private spending on pensions and long-term care under different policy options. We expect to be able to respond to the changing policy scene to provide analyses of options which may emerge during the course of the project.
outputs from the analyses of GHS and ELSA data, beyond those incorporated in the models, will add to the international literature on the relationship between socio-economic resources and receipt of informal care in the context of changing community care policies, facilitating new conceptual thinking about the relationships surrounding receipt of informal and formal care.

Contacts

Mr Chris Curry (PPI models)
Pensions Policy Institute
King's College London
4th Floor, Kay House
7 Arundel Street
London WC2R 3DX

Tel: 0207 848 3731
Email: chris@pensionspolicyinstitute.org.uk

Professor Ruth Hancock (CARESIM model)
Department of Health and Human Sciences
University of Essex
Wivenhoe Park
Colchester CO4 3SQ

Tel: 01206 873924
Email: rhancock@essex.ac.uk

Mr Raphael Wittenberg (PSSRU model)
Personal Social Services Research Unit
London School of Economics and Political Sciences
Houghton Street
London WC2A 2AE

Tel: 020 7955 6186
Email: r.wittenberg@lse.ac.uk

Linda Pickard (informal and formal care projections)
Personal Social Services Research Unit
London School of Economics and Political Sciences
Houghton Street
London WC2A 2AE

Tel: 020 7955 6214
Email: l.m.pickard@lse.ac.uk

Adelina Comas-Herrera (disability projections)
Personal Social Services Research Unit
London School of Economics and Political Sciences
Houghton Street
London WC2A 2AE

Tel: 020 7955 7306
Email: a.comas@lse.ac.uk

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