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Consultation on a National Care Service (November 2009)

The Government recently consulted on their proposed National Care Service (NCS).  A copy of my submission is pasted below.  I concentrate on funding issues and I am advocating a National Care Insurance, hypothecated for care, that people would pay on retirement if they had the means to do so. 

I agree with the Government that it would be unfair to fund the NCS through general taxation as the burden would predominantly fall on the current generation of young working people who have not had the advantages of free university education and affordable mortgages that people of the generation about to retire have benefited from.

SUBMISSION TO THE CONSULTATION ON:
CARE SUPPORT AND INDEPENDENCE;

Shaping the Future of Care Together

LYNNE JONES MP November 2009

Introduction

I welcome the Government’s proposal for a National Care Service (NCS), at the heart of the reforms proposed by the Green Paper[1].

Between 2008 and 2032 the number of over-85s is projected to double to 3.1million (Office of National Statistics, 2008).  Taking this trend into account and looking at the failings of our current system, there is no doubt that we need a radical change in the system for paying and delivering care and support services.  

On page 95 of the Green Paper, the Government sets out the remits it wants the NCS to fulfil:

“We want to build a National Care Service that is universal, fair, affordable, clear and helps people to live their lives the way they want to”[2]

The Government has put forward three possible funding models for the NCS: Partnership, Insurance or Comprehensive.  In this submission, I give my reasons for favouring the Comprehensive option.

I also comment on the proposal to integrate sources of support, for example, some disability benefits such as Attendance Allowance.

Background

In January 2008 the King’s Fund published The Future of Care Funding; Time for a Change,[3] the work of a coalition of 15 organisations from across the long-term care system, gathering the views of people with direct experience of the system.  The King’s Fund found that 90% of their participants rejected the use of a means test to determine whether or not an individual receives any state-funded care.  This support for a stronger ‘universal’ element, determined by care need rather than wealth or income echoes the recommendations of the 1999 Sutherland Royal Commission[4] and the 2006 Review by Sir Derek Wanless[5].

Funding Options

As I pointed out in my response to the 2008 Green Paper The Case for Change, if our social care system is to work, it is critical that it is one that people can understand.  I am very pleased that the current Green Paper has made this a central requirement.[6]  If the NCS is to fulfil this requirement it is essential to avoid any funding system that introduces complicated means-testing.

The Comprehensive Model

I support the comprehensive proposal in the Green Paper.  This proposes that everyone over state retirement age in need care and support would receive this free in accordance with their assessed needs[7].   The income foregone from the abolition of means testing would be made up by means of a compulsory contribution into a state insurance scheme by everyone over retirement age with the resources to do so.

The Green Paper suggests that people could pay in different ways, in instalments or as a lump sum, before or after retirement, or after their death if they preferred.

To protect individuals under a scheme of this sort, the Green Paper gives a figure of around 17,000 to 20,000 for the lump-sum contribution, compared with the 31,700 figure for the average cost of the care a 65 year old might need in their lifetime.

Assessment of the comprehensive contribution

Whilst an exact figure on the proportion of those currently in care homes whose care is fully funded is not available, we know that, at 1 April 2009, around 59% of care home residents were wholly or partly funded by local authorities or the NHS [8].  It is likely that the majority of these residents are fully funded given the difficulties that people with moderate care needs and the ability to make some form of financial contribution have in accessing local authority care under the current system.

So long as the threshold for payment was not lowered in real terms, the poorest people, who make up the above estimate, would not be required to pay.  The Green Paper sets out two options for assessing the level of comprehensive payment people with greater means might have to pay.

The first suggestion is that the size of a person’s contribution could be set according to what savings or assets they had.  The second suggestion is that people, other than those with low levels of savings or assets, could be required to pay a single set lump sum figure.

I am concerned at the lack of detail in the Green Paper on this crucial point.  The Green Paper does not go into the range of wealth of people retiring at the time the Scheme is to be introduced, to help assess the impact of the 17,000-20,000 set figure.  The Impact Assessment models the scheme from 2014 and the Government needs to provide detailed modelling with projected income figures for that date onwards.

In deciding how we assess the contribution, it is vital that we do not allow means-testing to shape the system.  The ‘set figure’ payment would comply with this condition.  Everyone with an income above the threshold, would know what they have to save for.  The 17,000 to 20,000 figure might not seem unreasonable to someone who receives a large lump sum on retirement who could then have peace of mind that this is all they would have to contribute.  However, given that most people do not have non-housing assets at this level, I am wary of a system that might allow the state to demand a large lump sum from people as they are about to retire and there are also concerns about fairness.  The lump sum for people just above the exemption threshold will be a larger proportion of their assets than for wealthier individuals who could well afford more than 20,000.

To avoid means testing at the point of need but to ensure account is taken of ability to pay, I would suggest that the exemption on paying National Insurance for people over state retirement age is removed and the ceiling removed completely.  This could be limited to the first years of retirement, say 10 years, when people are generally better off than as they get older.  The threshold for payment could be set at the same level as for income tax, which is higher than for non-pensioners.  In return, there would need to be a binding commitment that all funds raised in this way would be used to supplement the funding of the National Care Service and not used for general government expenditure – including by designating the contribution as National Care Insurance.

Such a system would not preclude the option of a one-off payment.  It should be possible to allow people who prefer to pay a lump sum “premium” to do so, with the assessment based on the net present value of the NCI contributions they would have been expected to pay.  Conversely, a person who was asset rich and wished to defer payment until they died could be asked to pay a higher lump sum from their estate.  This would have to be by means of a legally-binding charge on the estate.

In support of a Comprehensive Model

For the Comprehensive model to work, it would be necessary to set national standards of care delivered locally eg through Care Trusts made up of partnerships between the primary care trust and the relevant local authority.  We need a national comprehensive service, rather than one where local government decides on eligibility.   We know from work done by the Commission for Social Care Inspection (now part of the Care Quality Commission) that there is a trend of councils tightening their criteria determining who is eligible for care.  A national system on eligibility is needed to remove the sharp divide between those in full care and those with less severe care needs, who fall outside.

Currently, Local Authorities set limits on the amount they will pay which often will not cover what care homes/service providers consider an economical cost.  Some care homes have used fees from self-funders to subsidise fees charged to the local authority.  I am currently in touch with a constituent who is self-funded but the money is running out and the fees she is being charged are higher than the Birmingham City Council maximum.

The Comprehensive model would allow the pooling of risk amongst the whole population to create a system that is straightforward and fair and that would avoid unexpected high costs to some and the kind of problems illustrated above.

Such a model would achieve the following positive outcomes:

              removal of fear from the system;

              increased fairness, ensuring the care needs of those who, for example, suffer from Alzheimer's disease are recognised and met just as much as of those who require less care;

              people of modest means would not lose their homes and life savings in payment for their care;

              earlier intervention with more people helped to stay in their own homes and fewer people (hopefully none) in inappropriate residential care;

              a lower burden on the NHS with fewer emergency admissions;

              a lower administrative burden;

A clear system of comprehensive entitlement, that people understand is also more likely to stand the test of time because people will know what they could lose and will fight to hold on to it, should the NCS be threatened by a future Government.

When systems are complicated it is much easier for unsympathetic future administrations to undermine provision, without the public or even politicians realising the implications until it is too late.  An example of this was the undermining of benefits through the State Earnings-Related Pension Scheme (SERPS) which came into effect several years after the legislation making the changes was introduced.  If the principles of entitlement to the NCS are clear, simple and understood by all, as with the NHS, it will be easier to defend as a national institution.

Rejection of the Partnership Model

In this model, the responsibility for paying for care would be shared between the Government and those needing care and support.  The Government provides between a third and a quarter of the cost, but covering a higher proportion of the cost for people on a low income, with the least well-off getting their care for free.   Those with high care needs, for example, long term residential care, may still have to pay high contributions.

The Partnership model fails the Government’s test of simplicity as it would require an extensive means-testing system at its centre, with all the problems this brings.  The model would impact negatively on pensions’ policy, penalising people who save for retirement but end up with high care costs.  In addition to the disincentive to saving people would enter old age with a feeling of insecurity, with no clear knowledge of what they could expect to pay for social care.

The model would also waste money on the high administration costs necessary for a complex mean-test based system.

The Partnership approach also fails the fairness test.  It discriminates against women as their care costs are likely to be higher due to greater longevity.  The average lifetime expected cost of care for a female at the age of 65 is 40,400 compared to 22,300 for a man of the same age[9].

The model is also favours people who have low or no care costs and penalises those who save but are unfortunate enough to end up having high care costs.  The level of care that people need is a matter of luck and a just society should not seek to penalise those who have the bad fortune to require high care costs.  The Green Paper itself states:

“…some people who needed high levels of care and support would ….need to spend their savings and the value of their homes.”

Our social care policy must change so that people are no longer forced into this position (even if deferred payments after death were allowed as suggested in the Green Paper[10]).  For people who own their own homes but have limited other assets, the fear of either having to sell their home or not being able to pass this on to their children is a major worry.  It is time to move away from a system which allows the impoverishment of people with modest assets.

Rejection of the Insurance Model

The suggested ‘Insurance approach’, provides for an entitlement to a share of care costs from the state, like the Partnership model but with a further element of insurance, facilitated by the state but paid for by the individual, to cover additional costs.   This model would only pool risk amongst the people who participate and would leave those who do not with the possibility of facing high care costs, as in the Partnership approach.

Those who do not participate and do not have the resources to pay care costs would still have to be supported by the state, thereby penalising those with low incomes who contribute to the Insurance model - why bother if the state will pay anyway?  The scheme is also effectively compulsory for anyone who wants to save with any assurance that they will not have to pay out for high care costs from their savings.  Therefore it is more logical to have a comprehensive model that includes everyone and genuinely pools risk.

People of Working Age

Concerns have been expressed by groups responding to the Green Paper that the implications for those of working age are unclear, with the Government’s funding options focusing on those over 65.

However, I think that the Government’s focus on people of retirement age is reasonable, as the age at which a person needs care does affect their ability to contribute to the system.   People who are disabled or in need of care from an early age, over and above that which can be funded through Disability Living Allowance (DLA), will not be able to contribute as in the comprehensive model for people who need care later in life.  In reality, most people under retirement age with care needs have these entirely funded by the state.  Therefore, in the interest of simplicity, it would be better to abandon all means testing from the system.   It is important that DLA and eligibility to it, under current rules, are retained.  However, it would be reasonable to incorporate DLA into larger care packages.

Possible Integration of Disability Benefits

I agree with the Government’s analysis in the Green Paper that, whilst benefits like Attendance Allowance (AA) are highly valued, for good reasons, by those who receive them, there is unfairness in the system caused by having separate funding streams for social care and disability benefits.  Older people currently have to apply separately for the two sources of support, undergoing different needs assessment processes and this can result in some people not applying for support when they are entitled to it.

I am encouraged by the Government’s statement indicating a clear understanding why benefits like AA are valued by those who receive them:

“We know that disability benefits are popular because they provide a universal entitlement which does not depend on where a person lives, they provide a cash budget which can be spent on the services someone wants, and people often use them to support lower-level needs in ways that help them to stay independent and well for longer rather than developing high levels of need.”[11]

Despite such positive statements in the Green Paper, the suggestion later on that benefits like AA could be integrated into a new and as yet un-designed system has caused anxiety amongst those who will be affected.  A number of concerned constituents have contacted me about the proposal.

 

One constituent in particular wrote to me in detail explaining how she uses her Disability Living Allowance to help offset the increased costs of living with a disability, such as a cleaner, buying ready meals as she is often unable to cook for herself, taxi fares and the costs of doing her supermarket shopping online and having it delivered.  She explained that none of these things were available via Social Services as she had been assessed and denied support and she fears losing the control she currently has to spend her DLA on the things that she decides help her.  She does not want to have her budget ‘decided by a social worker’. 

 

On DLA, I am aware that the Secretary of State for Health, Andy Burnham has categorically stated on 22 October 2009:

 

“…we have now ruled out any suggestion that DLA for under-65’s will be brought into the new National Care Service”

 

However, my constituent’s point still holds for those in receipt of AA.  If the disability benefit proposal is to go ahead in relation to AA or any other disability benefit, it is crucial that people who now receive financial benefits to pay for additional needs as they see fit, will be able to continue to do so and that this cash will only be subsumed into large comprehensive care packages for people not able to manage such expenditure themselves.

 

On receipt of my constituent’s letter, I asked for assurances on these points from DWP Minister, Jonathan Shaw MP and I welcome the commitment I received in his response dated 3 November:

 

“It is important to note that we will only make changes to disability benefits if we are certain that by doing so we can better support disabled people, and in a way that draws on the best features of current disability benefits – where everyone can have a cash budget to spend on the services they want..”

 

Although I accept the principles that have been laid out, the main difficulty with assessing the current proposal is the lack of detail provided.  For example, will all ‘passport’ benefits currently dependent on receipt of disability benefits that may be integrated into the new system be covered by the explicit statement on ‘relevant benefits’ in the Green Paper:

 

"Whatever the outcome of the consultation, we want to ensure that people receiving any of the relevant benefits at the time of reform would continue to receive an equivalent level of support and protection under a new and better care and support system."[12]

 

Whilst the above statement is very welcome, I am concerned that there is no commitment in respect of people who might have otherwise become entitled to disability benefits after any change, other than the Government's commitment that the system will be 'better'.  The Government must ensure that people entering the system after these reforms are not disadvantaged compared to what they would have been entitled to under the existing system.

 

I urge the Government to provide more detailed proposals as soon as possible to allow more detailed scrutiny of how the Government’s aims on this policy point can be achieved in practice.

 

I support the call by Age Concern and Help the Aged for the Government:

 

“…to make it a legal right that all disabled older people will be able to get money to help them pay for the extra care they need because of their disability”.

 

Conclusions

I accept that there is a case for integrating universal disability benefits with social care funding streams where the existence of separate funding streams is causing people to lose out - but - the current national, transparent and legally enforceable criteria governing social security benefits must not be lost.

 

Any changes must benefit those who would have qualified in future as well as current recipients.

 

The Comprehensive model is the only one of the three funding proposals for the NCS that would allow the pooling of risk amongst the whole population to create a system that is straightforward and fair and that would avoid unexpected high costs to some.  We have a National Health Service that delivers excellent care at a cost that compares well with that in other welfare systems and at substantially lower cost than systems based on private insurance.  It is time we had an equivalent National Care Service.

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