A cap on care costs is due to be implemented from 2016, but it’s becoming increasingly clear that there are significant flaws in the proposal. It’s time to reboot the reforms and come up with a new version
In theory, it’s all done and dusted. The Dilnot Commission’s ‘capped cost’ reforms to care funding in England are to be incorporated into the Care Bill, making implementation in April 2016 a certainty.
However, there’s a problem. With time to study and understand the plans, a growing number of people are realising what has been clear for the last two years: the reforms will not actually achieve any of their objectives.
First, nobody will be protected from ‘catastrophic’ care costs, even those who reach and pass the ‘cap’. This is because of the difference between the rates self-funders pay for care and support and the rates that local authorities pay. At most, those who reach the ‘cap’ will become aware of a generous co-payment from their council.
Second, despite intense pressure from Number 10 on the insurance industry, it is clear that the reforms will not lead to a market in pre-funded long-term care insurance. Partly this is because the entrenched demand and supply-side barriers to such a market would never be overcome merely by implementation of the ‘capped cost’ model. It’s also because the £72,000 ‘liability’ the reforms are supposed to leave individuals with is itself actuarially uninsurable.
Third, it remains highly unlikely the reforms will provide ‘peace of mind’ to the population. Why? This is because – as described – the ‘cap’ is not a cap, and because the £72,000 threshold will be uprated annually at least in line with inflation. A pensioner who hears about the £72,000 ‘cap’ in 2016 is likely to be left shocked and dismayed to find it raised to £75,000 just a year later.
All these issues were identified when the Dilnot Commission published its recommendations in July 2011, but two things are now bringing them to a head.
One is that the list of journalists who have clocked that ‘the cap is not a cap’ and believe the government is wantonly misleading people about the protection they will benefit from, is steadily growing. It means the more the government tries to trumpet its measures to ‘cap people’s care costs’, the more this will be reflected back to them as criticism and accusation. A Daily Mail splash about the government’s ‘lies’ on care funding reform cannot be too far away.
The other thing that is changing is awareness among those at the social care frontline of the potential disruption that will be caused in 2016. This is most acute among care providers, who are realising that in less than three years, all the ‘self-funders’ they serve will be made aware of the usual rate paid by their council.
This will make for some acutely uncomfortable conversations in those care homes with a mix of private and council-funded beds. The consequences for the delicate ecology of current local care markets are likely to be huge.
The irony is that the story of long-term care funding reform during this parliament is still one of achievement. Not only did the government (especially the LibDem bit) keep the agenda going, it secured a commitment to an implementation date (April 2016) and found an additional £1bn to fund the reforms.
These are real achievements that no one wants to lose even if this government, like those preceding it, has ultimately kicked down the road the issue of how to bring new money into the care system in the face of rising, age-related demand.
As a result, the Department of Health and the rest of the care sector now finds itself in the position of a big software company that has committed to launching a new version of its operating system, only to discover major bugs in the software. In this situation, the company would double-down and try to sort through those problems and come up with a better version of the software in time for the launch.
This, in a nutshell, is the challenge now facing policymakers and all those with an interest in social care funding reform. Solutions are likely to lie in major changes to the way in which the government presents the reforms, the sale of so-called ‘immediate needs annuities’ directly by local authorities and major changes to the means-test thresholds that will be applied.
Implementing such fixes to the reform package will pose a headache to policymakers and ministers, but the alternative will be much worse.
James Lloyd is director of the Strategic Society Centre. The centre will be discussing these issues in a public debate on 10 September
