Did Dilnot’s proposals for adult care funding meet sector expectations?

How well do the Dilnot commission’s proposals measure up against key reform objectives, asks Jeremy Dunning

Protection against high care costs

Key proposals:

● A £35,000 cap on care costs for people who acquire needs at age 65 or above.

● Free care for those who acquire needs before they turn 40.

● An annual cap of between £7,000 and £10,000 on living costs in care homes.

Dilnot says that under his reforms, which would cost an additional £1.7bn a year to deliver, people would have to spend no more than 30% of their assets on paying for care, compared with over 90% for some people at the moment.

He also expects his plans would encourage insurance companies to develop affordable products to cover people against their £35,000 maximum care bill, as firms would no longer be liable for significant costs if customers needed care.

Dilnot says that people should also be encouraged to save for their care through their pensions or equity release schemes.

While many experts welcome Dilnot’s proposals, others warn that people may still not be protected against catastrophic costs, particularly as the £35,000 cap would not cover living costs in residential care.

Care advice organisation FirstStop says the plans seem unfair towards dementia sufferers, many of whom spend at least five years in residential care which could cost about £85,000 under Dilnot, meaning many would still have to sell their homes.

There are also doubts over how many people would take out products to protect themselves against the costs they are liable for, given the relatively low take-up of private pensions.

Philip Spiers, of FirstStop, adds that a “brave government” would consider taxing the assets of older generations and introducing compulsory insurance for those of working-age to ensure coverage for all.

Fairness

Key proposals:

● A national assessment and eligibility system to end the “postcode lottery”, with portable eligibility between areas.

● Increasing the means-test threshold for state support for residential care from £23,250 to £100,000 and capping individual costs.

The current funding system is unfair in many ways, according to the commission: in particular it denies state support for residential care to people with assets of more than £23,250 and operates a “postcode lottery” by allowing councils to set eligibility thresholds and operate their own charging regimes for non-residential care.

Capping costs for individuals and raising the means-test threshold is designed to address the first issue, and should ensure that people at all levels of income are better off.

However, the biggest benefits accrue to the top 40% of the income distribution. Stephen Burke, director of United for All Ages, has criticised the commission’s “regressive proposals” for levying the same care charge on all families – except those below the proposed means-test threshold – regardless of their wealth. He says the winners would be richer families whose inheritance would be protected.

Burke favours a tax on estates above a certain value to fund care, which would ensure higher costs for those with greater wealth.

The commission has defended its proposals, saying they ensure that state resources are distributed to people in high need, as well as those with low incomes, pointing out that need – rather than income – determines how NHS resources are distributed.

The proposal to introduce a national assessment and eligibility system is designed to ensure equitable access to care across the country and enable people to move areas without losing access, and is widely supported.

The Care and Support Alliance, which represents the major older and disabled people’s charities, says the plan would “reduce administration, confusion and complexity”.

However, councils would also still be able to set their own charges for non-residential services under the plans, leaving a postcode lottery in costs to individuals.

Underfunding

Key proposal:

● Additional public funding for social care to address existing under funding.

“The means-tested system is under extreme strain, and people are experiencing tightening eligibility and reduced care packages,” found the commission.

It says this is likely to cause rising unmet need, poor outcomes and greater demands on the NHS, and that the government needs to inject more cash into the current system, in addition to funding Dilnot’s other proposals.

While the commission did not specify how much extra money was needed, it could be as much as £2bn a year, says Richard Humphries, senior research fellow in social care at the King’s Fund.

This is equivalent to the additional money allocated to adult social care by the government in last year’s spending review, which covers 2011-15.

However, the Dilnot commission found that these resources had not “found their way to social care budgets in some areas” because of the significant cuts to council funding in the spending review.

Its call reflects the increasing evidence of how cuts are taking their toll on an already underfunded system. Age UK has estimated that 800,000 older people in need of care and support in England are not in receipt of formal services, and that this figure could rise to above a million. Meanwhile, the Association of Directors of Adult Social Services warns cuts next year will exceed those this year.

It has also led to councils squeezing the value of contracts with independent providers, one in five of whom expect to go out of business this year because of cuts, according to a Community Care survey.

Humphries adds that there is a “need for an extra quantum of money to get to the right starting line” to implement the other Dilnot reforms, such as a cap on individual care costs and a national assessment and eligibility system.

Enhancing understanding of the care system

Key proposals:

● An awareness campaign on the importance of saving for later life.

● An information and advice strategy to ensure better access to reliable information on services and funding for care.

● An objective assessment and eligibility system to ensure people know whether they are likely to be eligible for support.

The commission found a “very poor understanding” of social care, including the widespread false belief that it is free at the point of need, leading to people not planning for older age.

Its proposals address longstanding criticisms of the availability of information and advice for people with care needs, particularly self-funders.

The most recurrent experience of self-funders seeking support from social services was to receive a list of care homes and other services, found a report this year for the Association of Directors of Adult Social Services and the Local Government Group.

The commission would like to see a national website with information about how the system works, access to finance and support for carers, backed up by local information services providing tailored advice.

The proposals have generally been well-received, particularly from charities.

However, there are criticisms that the Dilnot funding proposals themselves will increase complexity.

Philip Spiers, of advice body FirstStop, says the combination of different systems of means-testing for residential and community services and the cap on care costs could make the system harder for many people to understand.

Integration with the NHS

Key proposals:

● Capping care costs should reduce the “cliff-edge” between free NHS care and means-tested social care.

● Budgets to be pooled more widely

Many people still experience “disjointed service delivery”, despite efforts to integrate social care with other services, particularly health, says the commission.

People also find the boundaries between services to be unfair, particularly in the case of NHS continuing care, where people receive free social care funded by the NHS, often alongside others with similarly high needs who must pay significant costs.

The commission says its cap on social care costs will make “the cliff-edge” between free continuing care and means-tested social care less steep.

It did not follow through with earlier suggestions that it would call for the existing national continuing care framework to be overhauled on the basis that it was “impenetrable”. However, it did back calls from the Law Commission’s review of adult social care law for continuing care to be placed on a firmer statutory footing to aid clarity.

Elsewhere, its proposals on integration are more about accelerating existing initiatives, such as pooling NHS and social care budgets, a move which should “reduce the number of unhelpful disputes between professionals”.

The emphasis on integration is welcomed by the King’s Fund. However, Age UK director of policy Andrew Harrop says he would like to have seen more on this issue and on early intervention services.

Will Dilnot be implemented?

The government has welcomed the report without committing to implementation, nor has it outlined a timeline as to when it might bring this in.

Its line is that it needs to consult widely and a full response will await next spring’s White Paper.

However, health secretary Andrew Lansley has warned that implementing the £1.7bn package in full could prove too costly, and that Dilnot’s proposals will need to be weighed against other priorities.

He has also opened the way for Dilnot’s proposals to be implemented in reduced form.

For instance, a cap of £50,000 on care costs could be introduced, rather than Dilnot’s preferred £35,000, reducing the state’s liability for care but increasing the potential for individuals to face high costs.

But there is good reason to believe that some reform will take place. For one, a White Paper will be produced next year. The strength of opinion behind the report leaves politicians less room for manoeuvre. And it is less likely to be affected by party politics as it was before the last election, when the Tories accused Labour of trying to bring in a “death tax”.

Lansley has accepted Labour’s invitation to take a cross-party approach.

However, what is highly unlikely is that the government will meet Dilnot’s call to pump extra resources into the social care system to address existing under-funding.

Lansley did not address this call in his response to Dilnot, while the current approach to public spending means money on the scale required is simply not available.

Case study: ‘My mother’s fees are already standing at £91,000’

Pauline Turner (left) with her sister Barbara (right) and their mother Annie

If my mother knew all her money was being taken [to pay for her care] it would kill her because she would be so upset that she couldn’t help her grandchildren or children.”

Pauline Turner’s mother, Annie, went into a care home three-and-a-half-years ago as a self-funder after her Alzheimer’s disease became so bad that she required 24-hour supervision.

The placement costs nearly £20,000 a year and to pay for this Pauline, from Margate, Kent, put Annie’s house on the market for £175,000.

Until she was able to sell it, she took out a deferred payment with Kent Council to pay for the care home, using Annie’s pension to keep the repayment down as far as possible.

After 18 months – with the house still on the market – the family owed the council £10,000 so they decided to accept an offer of £140,000 for the house. At the same time the family bought an annuity plan worth £56,000 covering half Annie’s care costs.

Annie’s pension and attendance allowance are also being used towards the fees, which have amounted to £91,000 so far.

Pauline, 67, says: “My mother worked from 14 to 65, never claimed a penny from the state and yet here we are, she’s penalised.”

She believes Dilnot’s call for a £35,000 cap on care costs may be too high and is not convinced by the proposal that individuals contribute up to £10,000 a year in residential care living costs.

But the family would have been helped by the report’s proposals and for Pauline its implementation cannot come quickly enough.

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Published in 21 July 2011 edition of Community Care magazine under the headline Did Dilnot Proposals Meet Expectations?