A Cap that Fits: Getting reform to care funding right

Twitter: #capthatfits!@sscthinktank!

September 10th 2013!!

! Chair: Josephine Cumbo, Financial Times!

!  Jane Vass, Age UK!!  James Lloyd, Strategic Society

Centre!! Andrew Cannon, Bupa Care Services!

Jane Vass, Head of Public Policy Strategic Society Centre 10 September 2013

A cap that fits?

Priorities for reform

1. Legislation should be clear, coherent and consistent. • People who need care and their carers and supporters should be able

to see what they are entitled to and what they are expected to contribute themselves, and should be able to assert their entitlements;

2. Eligibility for care and support must take account of the vast diversity in

care needs. • The care and support system is the safety net of last resort but it must

provide wellbeing, not just safety.

3. The framework recommended by Dilnot is an effective way to allow people to pool the risk of having to use up all of their assets to pay for care. • But many questions remain around implementation.

Where are we now?

• 1 in 2 of us will use social care at some point in our lives

• 1 in 4 people will need intensive or long term care costing more than £50,000

• 16% of older people who need care who currently face care costs of £75,000 or more

• However of 2.1 million people with care and support needs around 850,000 receive no formal help

• 87% of local authorities now only support people with substantial needs or above

• There are concerns about the quality of care and how this is inspected and regulated

• We are living longer and more people need care and support – funding is not keeping pace

The impact of Government proposals ….on  individuals

Meet Mrs A

• Lives alone and has no dependents

• Home worth £160,000 and £20,000 cash savings

• State Pension of £107.45pw and employer pension of £100pw

• Attendance Allowance of £51.85 TOTAL: Income £259.30pw Savings and assets £180,000

Mrs A: care needs

Mrs A:

• One of the 25% of people who will need a significant amount of care in later life

• Initially  assessed  by  the  local  authority  as  having  ‘substantial’  needs, qualifies to receive care at home at local authority estimated cost of £200 a week

• After  2  years  is  assessed  as  having  ‘critical’  needs  that  can  best  be met living in a care home at a current cost of £600 a week.

Total care received: 104 weeks of care at home and 104 weeks living in a care home

How would the cap affect Mrs A?

In July 2013 Age UK published modelling showing the impact – see http://www.ageuk.org.uk/latest-news/archive/greater-clarity-needed-

over-72k-lifetime-cap-on-care-costs/ Note that the research is based on the following assumptions: • Have NOT modelled full depletion (e.g. have not factored in additional

spending incurred and impact on overall asset depletion)

• Have NOT modelled impact of new benefit system

• Uses 2013 prices throughout, therefore for the purposes of this analysis:

o Cap = £61,000

o Means test thresholds = £14,250 lower and £100,000 higher

• Uses existing eligibility thresholds and domiciliary care means tests

Challenges

• Launching the system – need to get an assessment • Only  ‘substantial’  needs  will  qualify  – too high a bar! • Only  ‘care  costs’  will  count • Only  ‘the  usual  rate’  will  count • Mrs A will also have the right to ask the local authority to

organise  care  at  ‘usual  rate’,  subject  to  management  fee. This is likely to be cheaper than the rate payable by self-funders.

£50,700 4 yrs

£288 X104

=£29,952

£200 x 104

=£20,800

Mrs  A’s  spend – if she pays full rate

Current system

New system

Mrs A’s  spend   after 4 years

£73,207 £73,207

Contribution to cap n/a £50,700 Mrs A’s  spend  in Year 5

£31,200 £26,304

Extra weeks to reach cap

n/a 35

Mrs’s  total  spend  after 5 years

£104,407 £99,511

Council spend on care after cap

n/a £4,896

Cap £61,000 after 4 yrs 35 wks

£50,700 4 yrs

£288 X104

=£29,952

£200 x 104

=£20,800

Mrs  A’s  spend – if  she  pays  ‘usual  rate’  

Current system

New system

If LA organises care at ‘usual  rate’

Mrs A’s  spend   after 4 years

£73,207 £73,207 £60,727

Contribution to cap n/a £50,700 £50,700 Mrs A’s  spend  in Year 5

£31,200 £26,304 £20,064

Extra weeks to reach cap

n/a 35 35

Mrs’s  total  spend  after 5 years

£104,407 £99,511 £80,791

Council spend on care after cap

n/a £4,896 £4,896

Cap £61,000 after 4 yrs 35 wks

To summarise

Mrs  A’s  spending  will  only  be  capped  if  she  needs  care  for  more than 4 years 35 weeks

The impact of Government proposals ….on  the  system

Setting up and running the new system

• Local authorities, who will administer the new system, must be fully prepared and equipped to do a good job

• Need training

• Data systems – to create and monitor Care Accounts

• Support for staff using system

£335 million to local authorities to support implementation of funding reform in the June Spending Review.

Launching the new system

• Changes will encourage people to come forward • New eligibility criteria in 2015

• Does  the  new  criteria  actually  represent  ‘substantial’? • Only those who meet criteria will qualify for meter - shock

• Funding reform in 2016

• Current recipients • Self  funders  want  to  start  ‘meter’  (>  400,000) • Challenge when not assessed as eligible

• Managing workload will be a major challenge for councils

Communicating the new system to the public and providing I&A • Knowledge of system very low – people generally find out a time of crisis

• Aim of changes is to encouraging the public to plan for their future social care

needs

• Duty on councils in the Care Bill to ensure I&A are available to all older people and their families, not only those for whom the State is funding their care

• Communication plan required

• All the more necessary because of the complexity of the new arrangements • A wide range of channels and mechanisms will be needed

• People who need enhanced support to navigate the system must able to access

appropriate advocacy services

Local impacts 1. Resilience of the care market

• no real idea how resilient the care market would be to large numbers of self-funders asking the council to find them care at a considerably cheaper rate than they are currently paying

2. Impact on local authority budgets

• Upward pressure  on  the  council  ‘usual  rate’,  which  would  in  turn  place  pressure on council budgets that we know are already hugely over-stretched

3. Capacity  of  care  home  market  to  meet  ‘usual rate’  demand

• If this happens it would mean local authorities would struggle to meet their duties under the Care Bill.

Conclusions

Dilnot framework workable but the devil is in the detail – and many questions remain: • Is there enough funding in the system? • Is the balance between state and individual fair? • What impact will it have on care markets? • Can anybody understand it? • How can government manage expectations? • What effect will it have on quality?

• For top-ups, it must be clear what extra value people are getting

• Nobody should be forced to pay more just to get decent care

James Lloyd Strategic Society Centre

!  Government commitment to care funding reform in April 2016!

!  Treasury has found £1 billion p.a. for extra cost!

!!  … Both unexpected outcomes in June

2010.!

The good news…

!  Government’s preferred funding model is unlikely to meet any of its objectives!

!  Two options: !! Do nothing and wait for the problems to hit!!  Face up to issues now and try to fix them!

!  … Today’s report: “A Cap that Fits: The ‘capped cost plus’ model”!

But…

!  Cap on people’s private care costs of £72,000!

!  £118,000 means test threshold for local authority support for residential care costs!

!  “Enormous” insurance market (Source: David Cameron)!

!  Peace of mind among the population!!  … From April 2016!

The government’s reforms…

My presentation

!  What are the issues facing the ‘capped cost’ reforms?!

!  What are the ‘fixes’?!

1. “The ‘cap’ isn’t capping care costs” !  Metering system based on ‘usual cost’ rate

paid by local authorities!!  Significantly below what self-funders pay!!  Result: self-funders pay more than

£72,000 by the time of the ‘cap’!!  … and carry on paying top-ups beyond it.!

1. Options !  Change language and clarify perceptions!!  Raise ‘usual cost’ rate to what self-funders

pay!!  Guarantee availability of ‘top-up immediate

needs annuities’ via local authority, with ‘capped premiums’:!!  Lump-sum up-front payment for income paid

for rest of life!! Cover all ‘top-up’ fees; or!! Raise the amount your receive at the ‘cap’.!

2. “Few at the ‘Upper Capital Limit’ are receiving support from their council”

!  New ‘Upper Capital Limit’ of £118,000 in 2016!

!  Highly publicised threshold to means tested support in residential care. !

!  However, few will actually receive any financial support at this point. !

!  Why?!

2. “Few at the ‘Upper Capital Limit’ are receiving support from their council”

!  £118 Upper Capital Limit = £101k of ‘assessable wealth’ (£118k - £17k) !

!  Results in ‘tariff income’ + private income for average pensioner that will put them above ‘usual cost’ rate. !

!  So they receive nothing.!

2. “Few at the ‘Upper Capital Limit’ are receiving support from their council”

!  Average real threshold to financial support = around £80,000 of wealth. !

!  But variations in ‘usual cost’ rate mean there will be 152 average ‘Upper Capital Limits’ across the country. !

2. Options

!  Index Upper Capital Limit to ‘usual cost’ rates!

!  Change ‘tariff income’ ratios!!  Opt for single, simpler, Capital Limit for

residential care at lower level, e.g. £70,000. !

3. “People can’t buy insurance against the £72,000 liability”

!  Many demand and supply-side barriers to pre-funded care insurance!

!  Reforms do nothing to overcome barriers!!  £72,000 is actuarially uninsurable!!  Problem: public will not be able to protect

themselves from £72,000 ‘liability’. !

3. Option

!  Enable individuals to “buy” a lower ‘cap’, e.g. £0.!

!  How? Charge on estate, e.g. £20,000 in 2016!

!  Amount uprated with inflation and final figure determined during probate. !

4. “The reforms are making it harder to integrate health and social care” !  Appetite for integrated care across political

spectrum.!!  Integration of health and care: !

!  Funding (single budgets)!! Commissioning (single commissioning

process and outcomes framework)!!  Provision (single providers of health and care

in the community)!

4. “The reforms are making it harder to integrate health and social care” !  But ‘capped cost’ reforms may hinder

integrated care, especially at home!!  Risk of fixing rigid definitions of “social care”:!

!  Need!!  Who pays for it !

!  Reforms isolate social care within care pathway!

!  Under ‘full’ integrated care, “social care” doesn’t exist!

4. Option

!  Withdraw home care from ‘capped cost’ reforms!

!  Implement alternative mechanism to cap private expenditure on integrated home care in the community!!  E.g. ‘Welsh’ weekly cap on charges!

5. “The cap is scaring and confusing people” !  Time to reach the ‘cap’ in residential care?!

!  Between three and 8 years (e.g. Surrey and Wigan)!

!  £72,000 ‘cap’ will increase by around £3,000 each year from 2016!! More than many households save in a year.!

!  How to secure peace of mind in this context?!

5. Option

!  Additional ‘years of care’ cut-off period!!  New extra guarantee: “all self-funders will

receive usual cost rate after five years of funding own residential care”!

!  Five year guarantee would be: !!  Same across the country!!  Same over time (won’t increase with inflation) !

!  Even as ‘cap’ changes, cut-off period would stay the same!

6… Other issues

!  “Councils are struggling to implement the reforms”

!  “The ‘cap’ does not cap ‘Moderate’ need care costs”

!  “The reforms are encouraging families to play the system”

7. Conclusion

!  Major issues confronting the ‘capped cost’ reforms.!! Ultimately puts at risk political and public

support for care system.!!  No point in ‘sticking head in the sand’.!!  Need to ensure reforms are best possible!!  “The train can change destination after it

has left the station”:!!  ‘Capped cost’ vs. ‘Capped cost plus’!

A CAP THAT FITS: GETTING CARE FUNDING REFORM RIGHT

Andrew Cannon Managing Director Bupa Care Services 10 September 2013

BUPA CARE SERVICES BUPA UK

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70% of residents are state funded

Around

300 care homes

Bupa Care Services was created in 1996 and we now care for almost 18,000 residents

Bupa is the first care home operator to be awarded the

Gold Standard for excellence in staff development by Investors In People

27,000 Bupa people are looking after our residents

BUPA AND SOCIAL CARE FUNDING REFORM

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Bupa has a history of joining with many others in the sector to call for reform. We’ve done a lot of work looking at the £900m funding gap between the cost of care and the amount local authorities pay. Our priority is ensuring that the care needs of the most vulnerable people in society can be met on a long-term and sustainable basis. We welcome the Government’s commitment to looking at future funding of social care but there is a lot of work to be done to provide piece of mind and clarity to care service users and their families.

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THE IMPORTANCE OF INTEGRATED CARE

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Capped cost model too narrow in its focus. Budgets and services need to be joined up across health and social care to deliver the best standard care and create a more efficient system. For joint commissioning to work, need to stop thinking of health and social care as separate items or institutions. Over 8,000 NHS beds last month were occupied by “patients awaiting a residential home placement or availability. Capped cost model further separates social care funding from the rest of the system and poses a barrier to integration.

THE CAP EXPOSES THE GAP

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Providers facing challenges as local authorities cut the fees they pay for care. Under the new model, transparency of care fees will highlight the difference between local authority fees and self-pay fees. Risk that the transparency around local authority fees could drive self-pay fees down. Unsustainable market for providers and potentially forcing some out of the market rather than deliver poor quality. Risk for individuals of top-up fees, bouncing in and out of the NHS, or not having access to any care.

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NAVIGATING THE SYSTEM

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Dilnot reforms do not provide the transparency and simplicity needed - risks further fragmenting the system. Confusion over what is counted towards cap:

! People with ‘moderate’ needs may not be supported ! Living costs may be too high for some of the most vulnerable people ! Many will take four or five years to reach the cap!

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BUPA’S VISION FOR SOCIAL CARE

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Need to be constructive and help people access the care and support they need. Working with local authorities to identify needs and tailor our services to provide the right care in the right place. Preventative measures that help people stay healthier and happier for longer – e.g. installing grab rails in someone’s home or setting up a walking group. Overlap between our care services and home healthcare businesses. Looking to expand our services in the community. New demand-led call centre to provide advice and support on the most pressing issues to service users and their families.

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