Two weeks since publication, it seems that the proposals of the Dilnot Commission on Funding of Care and Support have led to an outbreak of confusion and misunderstanding.
At the centre of this is the ‘capped cost’ model that the Commission has recommended. Observers and commentators keep saying that this will cap how much individuals have to spend on care services. The implication is that if you pay someone to come to your home for 3 hours a day to help you with tasks of daily living, then after you’ve racked up £35,000 of receipts for this, the state will start paying those bills instead. It won’t.
The Dilnot Commission’s recommendations are not a ‘capped expenditure’ model, in which all you have to do is keep your receipts from care services. The proposals would more accurately be described as a ‘capped exclusion from means-tested support’ model: a local authority will record how much you would receive in state support if you were not above the means-test threshold, and when these ‘notional amounts’ total £35,000, you will be reassessed and given support regardless of your means.
But there’s a second issue that has confused people: the Commission’s ‘capped cost’ model is built around current local authority assessments, which assess need, not disability. In other words, councils look at how your care needs are currently being met, for example, by family members. If all your needs are being met, you don’t get anything now and won’t get any ‘notional’ support under the Commission’s ‘capped cost’ model.
Why do council needs-assessments function in this way? It’s all about spending money wisely: why transfer social care resources to individuals who can make do with care from their family? This is the way the care system has operated for years. The Commission has built this sort of needs-assessment into its model because the alternative – a ‘carer-blind’ assessment – would be so much more expensive.
It’s also worth taking a moment to consider the implication of this for whether or not individuals could insure themselves against the £35,000 liability.
Strictly speaking, this liability is uninsurable. Why? Insurers can only price care insurance policies on the basis of trends in disability and longevity. But in addition to length and level of disability, under the ‘capped cost’ model, a person’s £35,000 liability is determined by the availability of informal care, and how much a council gives individuals with a defined level of need. These are not things that insurers can price for.
The result is that any consumer who hoped that they could purchase insurance that interlocks neatly with the £35,000 threshold will be disappointed. The most likely insurance product would be a lump-sum payout (with an inflation uplift), payable when someone reaches a given level of disability, which may or may not be when their needs begin being ‘metered’ by their local authority. It would then be up to the individual to try and spend down their lump-sum so that it takes them to the £35,000 threshold.
However, this is not very efficient in insurance terms, and may not be attractive to those retirees that can afford to buy insurance. Indeed, this is likely to be one reason why the Commission does not “think it is likely that there will be significant growth in specific, pre-funded long-term care insurance products.”
James Lloyd is director of The Strategic Society Centre