The long awaited social care green paper proposes reforms including a new ‘national care service’, but what are the implications and where will the money come from?
If health secretary Andy Burnham gets his way, the concept of a new national care service will be at the forefront of the government’s bid to win a fourth term in power. He wants social care to be one of the “top three” election issues.
Mr Burnham’s launch of a “big care debate” last week gave headline writers a break from “postcode lottery” stories that have highlighted, for example, the fourfold difference between the £5 hourly charge for care for elderly people in Burnley compared with £21 for those with identical financial means in Surrey.
Instead, though, headlines included “OAP poll tax” and “Granny bashed”.
At the centre of concerns is the £20,000 that the Department of Health has estimated would be the upper amount everyone over retirement age would need to contribute to a new compulsory social insurance fund, either as lump payments or periodic contributions.
That system would provide all adults with free social care at the point of need, although those who needed a care home would still have to pick up the bill for accommodation costs, typically just over half of the average weekly charge of £500.
Although the £20,000 cost would initially be borne by over-65s, the green paper proposes that this might eventually evolve into a payment people could spread over their working life.
According to DH figures in the impact assessment accompanying the care and support green paper, this “comprehensive” system would cost the state £7bn more a year by 2014 than the current system.
Although five alternatives were presented in the paper, in essence these boil down to just two. The free at the point of use “comprehensive” system and a variation of the partnership model detailed in the King’s Fund’s 2006 report from Sir Derek Wanless on the future funding of long term care.
The green paper’s version is substantially less generous than Wanless - it proposes that up to a third of each individual’s care package is paid for by the state, as opposed to two thirds proposed by Wanless.
It also does not follow the Wanless proposal that the government should incentivise personal contributions by matching them pound for pound. However, the DH estimated its version of the partnership model would cost the state some £5bn more than the current model - slightly more than Wanless’s estimate.
Personal contributions for care over and above the minimum “entitlement” could then be through a private pay as you go system, as now, or a state backed insurance system.
Where will the extra £5bn-£7bn state cost come from and how much will need to be raised through extra taxation or social insurance? The question is of particular interest to the NHS because in 2006, when the King’s Fund published its report, it was suggested that for every extra pound invested in preventive social care, the NHS could save 30p.
Formulated crudely, that could suggest some £2.1bn of the £7bn extra being recouped from NHS coffers: not a comfortable thought with the £15bn-£20bn efficiency savings that are already pencilled in over the coming years.
Perhaps fortuitously for the NHS at least, the evidence on the cash benefits to health spending from preventive social care is described in last week’s impact assessment as “limited” and “very difficult to measure”. The best stab the DH gives is a “tentative” £200m saving to the NHS.
Instead the DH has proposed finding £3.7bn of the extra needed by phasing out the non-means-tested attendance allowance benefit paid to disabled over-65s. The argument in favour runs: the benefit was intended as a payment to cover care costs. If the state provides all with free care, the rationale for the benefit is removed.
Elderly and disabled groups not surprisingly see things differently, emphasising the independence and choice receiving the payment into their own bank accounts brings them.
However, new research from the DH funded personal and social services research unit, based at the London School of Economics, estimates more than 400,000 current claimants do not have a reported disability - at least when asked about difficulties they have with “activities of daily living” such as washing, dressing and eating.
The sum total of their claims could reach over £1bn (see graph). However, the unit warns the figures need to be treated with some caution.
Even if the DH wins its £3.7bn argument with benefit recipients, it will still have up to £3.3bn to raise through compulsory social insurance under the “comprehensive” model.
The £20,000 contribution proposed is compared, favourably, in the green paper with the £31,700 average lifetime cost of care for a 65-year-old.
But the research noted that mean average cost was distorted by the “highly skewed” nature of care costs, where those with both high need and large savings can end up spending £123,600.
The median average lifetime cost is £21,400 - very close to the £20,000 a social insurance fund would require from each over-65-year-old. The individual contribution is higher than it would be if everyone was paying it because some will be exempt on grounds of low income.
At present some 75 per cent of over-65s receiving care are exempted from care charges.
As figures from the research unit show, it is those whose wealth is above average - with assets worth more than £55,000 - who are most likely to go without needed care.
For every 1,000 older people in that social group, there are 53 people going without six hours of vitally needed care a week (see graphs).
It is that which is of most interest to the NHS, as unmet care need often translates (in an as yet unquantified way) into NHS demand.
According to the green paper impact assessment, there are 1.2 million hours of unmet social care need across England a week. Under the partnership model, this would shrink to 450,000. Under the comprehensive model it would be reduced to zero.
Persuasive stuff. Next step: Andy Burnham needs to convince the local authorities, disabled benefit claimants and home owners.
How local government sees a national model
Local government has good reason to ask what shocks councils could face with the creation of a national care service.
One of them is potentially losing control of adult social care spending - an annual budget that the Local Government Association estimates at around £5.3bn a year.
If the universal assessment and care entitlement equate to a fixed payment for everyone with the same needs, the green paper says it is “likely” that council tax - which accounts for 80 per cent of what is spent locally on adults’ services at some councils - would be the wrong way to fund it. Payments would come straight from national taxation.
The alternative is part local, part national funding, with residents given entitlements to a particular level of care, and councils responsible for determining how much funding was required to provide it.
The LGA supports the proposals for closer working with the NHS and the pooling of some state benefits to cover the costs of care. But it vehemently opposes the fully funded national model, warning it could “jeopardise” other services such as transport, housing and leisure, which have a strong support role for adult social care.
King’s Fund social care fellow Richard Humphries is sceptical of the chances any reforms will have of offering genuinely universal entitlements.
“Just because something has the word ‘national’ in the title does not remove local variations,” he said. “Since its inception the NHS has had to find different ways of reducing huge local differences. Consistency is not the same as uniformity - a one size fits all approach is not going to do it.”
With a consultation on the proposals running until mid November, more than one observer has spotted the government’s savvy in dubbing its proposals a national care service - evoking the bold spirit of the creation of the NHS, while reminding the masses that the health service “doesn’t do” social care.
Jim Dunton, reporter, Local Government Chronicle