Dilnot proposals ‘will not deliver insurance market for care’

The insurance industry is unlikely to back the Dilnot Commission's proposals to reform adult care funding, according to a think-tank chief.

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The insurance industry is unlikely to back the Dilnot Commission’s proposals to reform adult care funding, according to a think-tank chief.

The commission’s recommendations envisage insurance companies stepping into the market and offering products to self-funders to cover them up to a £35,000 cap on social care spending, with the state meeting costs above this point.

But James Lloyd, director of public policy think-tank the Strategic Society Centre, told NCASC that Dilnot’s recommended £35,000 “cap on costs” was “strictly speaking, uninsurable”, prompting concerns about the prospects for the emergence of a large market in pre-funded insurance.

He said this was because the cap was based on how much councils would pay for care and not on what a person would actually pay, nor on objective factors about a person’s level of disability and life expectancy, on which insurance companies rely (see below).

“At the very best what will be on offer is the equivalent of a critical illness product,” he said. “I don’t think there will be any pre-funded insurance market. The implementation of the [£35,000 cap cost model] and the design of the model and the implications for users means there will be no market at all.”

Peter Hay, president of the Association of Directors of Adult Social Services, also raised concerns at the session on implementing Dilnot. He told the session that social care funding was not sufficiently high on the political agenda, pointing to an announcement over bin collections at the Conservative Party conference as a comparison. “The finance industry is still to be fully engaged. Part of the engagement process we are conducting is getting them around the table.”

Lloyd said that, for the Dilnot proposals to be implemented effectively, would need an extra £15bn a year by 2025 to keep entitlements at their current level. But no debate had been held on where this would come from.

The conference was also told that cross-party talks could resume soon. Shadow health secretary Andy Burnham told delegates that he had conditionally accepted an invitation from health secretary Andrew Lansley to participate.

“Dilnot is a step forward to a fair and more sustainable system, but I’m clear that any solution has to be affordable in the long term and it has to be a system that everyone can afford to use,” said Burnham.

He also attacked the government’s Health and Social Care Bill as moving away from the types of “preventive services in the home” that would be required as part of an “integrated package” in a reformed social care system.”

The government will respond fully to Dilnot’s findings in a White Paper on social care reform next spring.

The limitations of Dilnot’s cap-on-cost model

The Dilnot Commission’s cap-on-costs model does not count a self-funder’s actual spend on care but rather is based on what a local authority would spend on a person’s care if they were not excluded by the means test.

This means an individual’s “cost clock” starts when they meet the councils eligibility threshold for care – not necessarily when they start funding care for themselves which may be earlier.

Take the example of a 70-year-old self-funder who has entered a care home. She is paying £800 a week and, although she meets her local authority’s eligibility, if she was funded by the council it would pay £500 a week.

This means that 70 weeks will pass before she reaches the suggested £35,000 cost threshold based on the council’s calculations. However, after 70 weeks she will have spent a total of £56,000 on her care.

In addition, at the point she reaches the cap, her council will only fund her to its standard level – £500 – leaving her with an ongoing £300 a week to self-fund.

As a result, insurance schemes for £35,000 will cover only part of that person’s care costs. Because eligibility thresholds and payment levels will vary between councils it is difficult for insurance providers to gather objective data about the likely pay-outs.

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