In today's Budget speech, Chancellor of the Exchequer George Osborne formalised the Government's commitment to introduce a cap on social care costs one year earlier than originally proposed - 2016 instead of 2017.
Under the Government's proposals a local authority, having assessed whether someone is eligible for social care, will calculate how much it will cost on a weekly or monthly basis to meet the cost of their care. If this person doesn't qualify for financial assistance under the means test, their care costs will be 'metered' (keeping a running total of what people are paying for their care).
The cap would have been set at £75,000 in 2017 and the means-test threshold at £123,000 for the same year. Now the measures have been brought forward, in 2016 the cap will amount to £72,000 and the means-test threshold to £118,000. These new prices account for inflation and are in line with the 2010 prices set out in the Dilnot report; the cap has not been reduced.
The sooner, the better?
When last month the Government announced its plan to cap social care costs, the Labour party were quick to describe the reforms as too little, too late. The monitoring of someone's care costs will not begin until 2016; it doesn't matter how much they've already spent on their care up to that time.
Liz Kendall MP, the Shadow Minister for Care and Older People, said that most people currently in care would not benefit. She explained:
"If the cap is set at £75,000 it will take people four or more years before they hit the cap. The vast majority of people in residential care homes would have passed away before that happens."
Whether or not current residents will have help with their costs depends on how much they're currently paying which, in turn, determines how long it will take them to reach the level of the cap.
Ms Kendall suggests that "the vast majority" in care at the moment will not receive state assistance because they won't run up costs of £75,000 within the next four years. This calculation is based on Laing and Buisson's estimate that the average local authority rate for residential care is £480 per week (for England only).
When it comes to metering someone's care costs, the Government is expecting everybody to contribute up to £12,000 per year for their food and accommodation (which is, as the economist Andrew Dilnot recommended, somewhere between £7,000 and £10,000 in 2010 prices). Ms Kendall calculates that this would mean that some £150 is deducted each week from the £480 rate. This is an approximate calculation of the weekly contribution someone would make towards their £7,000-10,000 per year 'hotel' costs.
The end result is that the metre would tick over by some £330 each week. To reach the £61,000 cap (in 2010 prices) would, on average, take some three and a half years.
Ms Kendall based her claim on the fact that the average length of time spent in a residential care home is two years. Therefore someone who's currently in a care home is likely to die before they'd be eligible for their costs to be metered. (It's important to clarify that we're talking about people who need social care in their old age - the over 65s - not children and young adults.)
Although some people will move between care homes (and their relocation will affect the overall average), it's fair to assume that for the majority of people their "stay" ends when they die.
Several studies confirm that two years is close to the average length of stay in a nursing home. Healthcare analysts Laing and Buisson note that there is no "routine data" available in this area, but that research from both BUPA and the Personal Social Services Research Unit (PSSRU) indicates that 1 year and 8 months is a reasonable estimate.
Meanwhile in a residential home, where people are likely to have care needs that are less severe, the average length of stay is 3 years and 2 months. However, this is a mean figure and is therefore likely to be distorted by the fact that many of those living with dementia will require long-term care and so will pull up the overall average.
Regardless of whether we apply the figures for nursing or residential care, these averages suggest that many people currently in care homes will pass away before the introduction of the cap in 2016. However, those who stay in care longer than average are, potentially, in line for state support.
The Labour party's figures are via a rough and ready calculation. However, this type of estimate may be the best we have.
Today's announcement has been broadly welcomed. An earlier date for the cap will - in theory - protect more people from excessive costs, even though it's unlikely that it will make a substantial difference. Nevertheless, many of those suffering from dementia will spend a long period in residential care and some of them who are now in care homes will meet the £72,000 cap during their lifetimes.
It will, however, be several years before we'll know whether Labour's warning is well-founded - and whether the number of people protected from excessive care costs is a legacy for the current Government to be proud of.
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