Tuesday, September 14, 2021

Lifetime caps on dementia costs

This is Joseph.

So I was looking at this proposal in the United Kingdom to cap dementia costs over one's lifetime to £86,000 per person. End of life care costs are challenging, especially as spouse's often pool assets over a lifetime and disentangling what is what can be quite hard.

But the other side of this proposal is that it does nothing to protect the future access to assets of the person under care, as dementia is an irreversible disease that tends to lead to poor outcomes. Now, that would be different if a person was abandoned as soon as they run out of assets. But even stingy countries like the United States use Medicaid to prevent that

Instead, the main thrust seems to be to protect the inheritance of the upper middle class. If your house is worth £100,000 and you have £8,000 in savings then the cap does little to protect assets. If you have a house worth £800,000 and £12,000 in savings (say you bought a house in the correct part of the country to benefit from asset inflation) then you have a lot of protected wealth, which you (as a dementia patient) are not going to be spending. 

This is not to say that this policy is necessarily bad or that there might not be good reasons for the design, as is, but that these are very hard policies to design well. 

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