Care fee cap… the devil is in the detail

So who were the winners… and losers… from the announcement to cap care fees?

Yesterday, Care Minister Norman Lamb set out the Government proposals to establish a new, capped funding system. This was (after a lot of pondering and number crunching) their response to the Dilnot Report, which basically said that the current system is unfair, discourages thrift and robs some people of all of their savings to pay for their care.

You can find a detailed report on the announcements here – http://www.agenda-efa.org.uk/site/2013/07/consultation-announced-on-new-fairer-care-funding-system/ – but this is my personal take.

The Government says it accepts the principles behind Dilnot – but where Dilnot called for a cap of £35,000 to be set for lifetime care fees, they are talking about £72,000. Moreover, people’s “living costs” (set at a standard £12,000 a year, wherever you live in the country, despite huge regional variations) will be taken out of the equation.

As the average person’s stay in a care home is just a couple of years (effectively end of life care) it doesn’t take a mathematician to work out that for the vast majority, you will run out before the cap cuts in.

Indeed, even according to the Government’s own estimates, only 16 per cent of people reach a £72,000 care cap.

So the vast majority of people will see no benefit from this element of the proposal.

And what about the other key component: that the upper limit for assets before help with care costs will cut in has been moved up from £23,250 to £118,000 if they have a house or £27,000 if they don’t?

They say that up to 100,000 more older people will get financial support with their care costs… by 2025/26, but not how much.

The move to £27,000 from £23,250 is minimal. The move to £118,000 is meant to help those with a partner or dependent living at home. But the vast majority of people going into care are currently living alone, and the value of virtually every house in the country is at least £118,000 – so it won’t help them, or dependents who don’t have a share in the house. Double that to £236,000 for couples where the home is shared jointly and you still only have the average value home.

In fact, a cynic might say that where the original Dilnot proposal would have been truly radical and of help to large numbers of people across the country, the principal beneficiaries of the Government’s largesse now will be more affluent pensioners from Tory heartlands in the South.

There is another big concern that I have over how this is rolled out: local authorities.

LAs will be expected to do the bulk of the extra work this will involve – including processing all the additional assessments they now need to make on people who will be paying for care. Currently (according to Laing & Buisson, 43 per cent of people currently pay for their own care – taking them out of the orbit of LAs.

So there will 43 per cent more people to process by organisations already stripped to the bone. Expect this function to be outsourced, pronto.

The Department of Health itself estimates that over 500,000 more people could make contact with their local authority in 2016 – who will be manning the phones?

Councils will also be expected to facilitate people taking out deferred payments, acting as a bank and using the person’s home as collateral to pay their care fees. This is currently meant to be an option available on request from councils, but is more honoured in the breach than the observance.

The Government has put aside £335 million for 2015/16 to cover the costs of implementing the cap and the requirement to offer deferred payments. This includes funds to enable local authorities to assess needs for care and support around six months before the introduction of the cap.

But again, no resource is there at the moment, so who will do the work? I suspect it will be farmed out… but who to? A new ATOS?

My biggest concern is around how LAs will set the “personal budget” for each individual: basically, the level of care they are prepared to account for.

At the moment, according to Laing & Buisson, “English councils are paying just £480 per week for residential care in 2012/13, approximately £50 – £140 less than the ‘fair market price’ range of £528 – £623 (with nursing care fees being about £150 per week higher.

So if you are expecting to go into a care home that offers anything other than a base level of care – and have that fee set against your cap… forget it. You could find yourself entering a long dispute with your LA (and Mr Lamb conceded that you will have the right to challenge a decision) or top up your fee yourself (as often happens already – in 56,000 cases according to Laing & Buisson.

Mr Lamb also pointed out that the additional bargaining power that LAs had with care and residential homes meant that they could help negotiate a better deal. But can care homes afford this to happen or will that drive them out of business?

Here I will quote from a Laing & Buisson press release from January this year, anticipating this new announcement: “There are also hidden dangers from Dilnot for care home operators… In particular, moving the upper limit of the asset threshold from £23,250 to £100,000 would mean that large numbers of care home residents who are presently private payers would be drawn within the ambit of local authority payment, meaning that a significant proportion of the premium fee rates which are presently needed to cross subsidise inadequate local authority fee rates may gravitate towards the low fee regime of councils.”

Indeed, many care homes will not accept local authority funded residents because they claim they are uneconomic; in others, privately funded residents effectively subsidise those being funded by the authority. I know of one care home association that has been fighting a long legal battle to get their local council to accept a rate that enabled homes to provide a decent level of care and make a modest profit.

“The reality,” says Laing & Buisson, “is that independent care home providers are having to rely more and more on cross subsidies from private payers. Without these subsidies, large numbers of care homes would be literally bust.”

So if local authorities do have “more bargaining power” and drive down process, is that what we want? Good homes out of business and a race to the bottom?

And here is one last thing to conjure with. If you want to go into a home at the moment because you feel you can’t cope at home – and you have the money to go – you yourself make that choice.

From 2016 you won’t have that choice if you want the “clock to start ticking” on your care fees cap. Your local authority will make that choice for you. Personally, I wouldn’t want that – and I’m not sure many other people will either.

Laing & Buisson report:

http://www.laingbuisson.co.uk/MediaCentre/PressReleases/CareofElderly201213PressRelease.aspx

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