Will the ‘capped cost’ model become a reality?

Ten years on from the Commission on Funding of Care and Support (the ‘Dilnot Comission’), the ‘capped cost’ model is again at the centre of debate on how to make England’s system of means tested support for care costs fairer.

By James Lloyd

The fact such a debate is happening at all is testament to the hard work of campaigners, as well as the spotlight thrown on the fragile care sector by the pandemic.

Does Downing Street’s apparent appetite for implementing the ‘capped cost’ model mean that after a decade, it will finally become a reality?

This will only happen if history does not repeat itself.

The previous Conservative government had a plan to implement the ‘capped cost’ model – but then changed course.

In  July  2015,  the government  announced  that  it  would  delay  implementing a ‘cap’ on costs from April 2016 until April 2020. The  Government  cited  the  expected  £6 billion cost  of  the  policy  (over  five  years)  at  “a  time of  consolidation”  as  the  reason  for   delay,  and  noted  the  “genuine  concerns raised  by stakeholders”. In December  2017,  the  revised date  of  April  2020  was dropped and no new date was announced.

Why was the ‘capped cost’ model dropped by the government and what needs to happen to prevent a similar outcome?

A key argument advanced by the Local Government Association and others in 2015 was that the money would be better spent on propping up the underlying means-tested system.

This suggests that to overcome concerns about priorities, the ‘capped cost’ model will only be successfully implemented as part of a larger injection of funding into the care system.

The ‘capped cost’ model also lost favour with the government because, as the then Care Minister noted in a statement to the Commons: “there are no indications the private insurance market will develop as expected.”

Although the creation of a financial services market for care products was one of the original key purported benefits of the ‘capped cost’ reforms, it is rarely discussed now. The absence of such products therefore seems unlikely to be an impediment.

However, the reasons the ‘capped cost’ model was dropped weren’t just about spending priorities and financial services, and were hinted at by the government in referring to the ‘genuine concerns’ of stakeholders. These included many councils and care providers who by 2015 had begun to grapple with the practicalities of implementing the model.

What were these concerns?

The most prominent was that the ‘capped cost’ model doesn’t cap the costs of people who pay for their own residential care. This is because of the difference between what councils and private self-funders pay for residential care, even in the same care home. Under the model, if they reach the notional ‘cap’, self-funders would only receive what their local authority pays for the residential care of those entitled to means-tested support, which is typically far lower than what self-funders pay. As a result, self-funders would have to carry on paying top-ups beyond the ‘cap’.

In fact, because councils would use their typical rate for residential care to calculate when people have reached the ‘cap’, rather than what individual self-funders have actually paid, most self-funders would have spent far more than the notional value of the ‘cap’ before they were entitled to support.

Another key concern of stakeholders related to the effect the ‘capped cost’ model would have on the residential care market. Informing every self-funder (and their family) what the local council pays for care could lead to chaos in the residential care sector, bringing to the surface the hidden cross-subsidy of local authorities by self-funders among providers with a mix of residents. This was why, when it set aside the ‘capped cost’ model, the government also set aside Section 18(3)  of  the  Care  Act,  which would have given self-funders  the right to request  that  the  local  authority should arrange their care when they are seeking to move to a care home.

These issues with the ‘capped cost’ model, and others, all remain to be worked through.

If the ‘capped cost’ model helps to push over the line a major funding injection for the existing means-tested care system as well as wider reforms, the model will have performed a vital political role.

However, if the decision to implement the model occurs, there will be a huge amount of work to do if history is not to repeat again. If this work doesn’t happen, the issues above could yet undermine public support for the reform, and with it, support for higher taxes to pay for an improved care system.

This blog first appeared here.

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