Blog: Capped costs for long term care?
01 March 2015
Paying for long term care is one of the most enduring and controversial issues of our time, and with an ageing population it is certain to continue to be so. The Care Act of 2014 attempted to find a way forward that would – in the words of the Minister Norman Lamb – “put the risk and fear of catastrophic costs firmly where they belong: in the confines of history.” The Act establishes the principle – for the first time – of a cap on care costs, set at £72,000, and promising to “provide protection and peace of mind (…) to people who have worked hard all their lives so that they need no longer fear they will lose almost everything just because they are unlucky enough to have the highest care needs.” But will it really do so?
The consultation on draft regulations and guidance for this part of the Care Act (due to be introduced in April 2016) raises many questions and leaves many unanswered. From 1 April next year anyone assessed by a local authority as having “eligible care and support needs” will begin to progress towards the cap. The local authority will be required to operate a care account for each person and record their progress towards the cap. For people who are self-funding and making their own arrangements there will be an independent personal budget (IPB) providing a virtual account. People will receive an annual care account statement setting out their progress towards the cap.
People’s actual care costs and what counts towards the cap will not necessarily be the same. The calculation of ‘what counts’ is based on what the cost is (or would be in the case of self-funders) to the local authority “to meet a person’s eligible care and support needs.” There are a number of factors to consider here. Firstly, this amount will exclude a ‘notional’ sum for daily living costs, which it is argued everyone has to be responsible for just as they would if they were living in their own home. This has been set at £230 per week, and while the consultation document acknowledges that setting this sum has not involved ‘a precise science’, many might think it sets the bar rather high. Consultation is taking place on whether there should be further consideration of the level and/or approach to daily living costs. It could be argued, for example, that if people reach their cap, their financial assessment for contributing to daily living costs should be made on the basis of income only and not remaining capital assets.
Secondly, the amount that the local authority would pay for a care home place is likely to be significantly less than self-funders will pay for the exact same place and service, all other things being equal. It is well-documented not only that local authorities are able to benefit from their large purchasing power to negotiate price reductions but also that self-funders typically pay a premium which effectively cross-subsidises publicly funded care home places. Thirdly, ‘what counts’ towards the cap will also exclude additional payments (top-up payments for those being supported by local authorities) that people ‘choose to make’ for preferred accommodation. While it cannot reasonably be expected that local authorities would pay for upgrades or optional extras, this does however raise questions about how much choice people really have over additional payments. Needing proximity to family members, for example, may limit the choice of home available, and there is also evidence that people often face ‘extra’ costs to pay for what might be expected to be included as fairly basic care. Both for people being funded by the local authority and those self-funders paying additional costs, the question of continued affordability of top ups raises major concerns about how long someone might have left to live. The consultation document warns that people need to be “aware of the potential consequences should they no longer be able to meet the costs associated with their choice” and necessitating a move to a setting that is within their personal budget. A move of care home can be a traumatic prospect for anyone (and one that carries significant risks), and certainly so for someone who has been in a residential setting for a considerable length of time.
The consultation document provides various case studies to illustrate how the new system might work for different scenarios. Two facts are striking: it will take a considerable time for most people to reach their cap (3-4 years), and having done so, they will continue to face substantial costs (daily living costs and any top ups) despite the local authority becoming responsible for their care and support costs. Comprehensive data on average length of stay in care homes is not available but the best estimates from research by PSSRU found around half of admissions died within about 15 months (462 days), and average length of stay was just over 800 days (little more than two years). Around 27% of people lived for more than three years. It is obvious that most people in care homes will die before they reach their capped contribution.
Paying for care is a complex and politically high risk area. Successive governments have failed to grasp the nettle despite multiple analyses of the nature of the conundrum. The Care Act offers an attempt to move forward and to respond to the recommendations made by the Dilnot Commission. It isn’t a perfect solution and for people who have grasped only the central message that their liability will be capped at £72,000, there will be disappointment and frustration to realise this isn’t quite the case.
An enormous challenge confronts local authorities in preparing for the changes; putting in place the assessment and care account systems that will be required will be demanding and complex. Clear information and advice from local authorities will help in explaining the cap and what counts and doesn’t count, but that will not be the end of controversy. It is no surprise that the Government has recognised that a new appeals system is likely to be required. How that will operate remains to be seen, but certainly the experience with similar appeals in the area of NHS continuing care proved to be inconsistent and poorly understood, necessitating a costly and bureaucratic review of decisions and financial restitution to thousands of people. Avoiding similar issues affecting a much larger population will be vital.
The capped cost model will not take effect under this Government’s watch, raising the prospect that this debate is still not over and how to pay for care and the balance between individual and collective responsibility will once again be the focus of further reform and continued uncertainty.