A fairer approach to means testing for social care funding in England
The government’s complex method of means testing for social care should be replaced by a fairer and simplified approach, according to a new study from Cass Business School.
With the number of UK citizens aged 75 or above doubling to 10 million by 2040, social care funding remains a significant and pressing public policy challenge.
The Care Act 2014 presented an attempt to offer a sustainable model for funding, but its introduction has been postponed due to concerns about cost. A new study from Cass Business School and The International Longevity Centre - UK uses this delay as an opportunity to assess both existing and proposed forms of means testing individuals, and finds both wanting.
The Cass research, titled Means testing social care in England, proposes an alternative approach in which a person's savings and income would be treated on an equivalent basis. Currently, responsibility for providing care is split between the individual and the state. If an individual has assets over £23,250 they are deemed able to meet the cost of their care. If their assets are valued below £14,250, they are eligible for full funding from local government. If the value of assets falls between those two thresholds, a combination of local government funding and individual contributions is calculated.
Under the proposals set out in the 2014 Care Act, local authorities must carry out an assessment of anyone who may require care or support, regardless of their elgibility for state-funding. Once the needs assessment is complete, a financial assessment (or 'means test') follows to see if the individual qualifies for state financial support. Under this system, there will be a life-time cap on care costs. Everyone with eligible needs will have a care account that records their spend towards the cap, which the government has set at £72,000. Once that cap is reached, the subsequent cost of care is met by the state. The cap has been proposed to prevent people incurring financially disastrous care costs, providing some peace of mind that people will know with certainty what they are expected to contribute. However, the scheme has its own shortcomings. For one, the cap does not cover daily living costs. In addition, the new administrative machinery required to monitor the scheme, plus its wider scope of assessment, brings into question its cost-effectiveness and practicality.
Therefore, this study from Cass Business School expounds a third way of meeting the challenge of social care funding. It argues that this alternative formula, called the 'preferred formula', is fairer and does not require capital limits. Its proposals aim to:
- Create a means test that can be used both for home-based and institutional care, with equal clarity;
Make the system fairer and more transparent e.g. by removing 'cliff edge' limits to funding eligibility;
- Treat people with similar personal wealth, but which is split differently in terms of income and assets, equitably and fairly;
- Simplify the rules so that anybody could be reasonably expected to undertake their own assessment;
- Bring new money into the system, primarily from individuals, by providing incentives to save.
Professor Les Mayhew, author of the paper, said:
"We reviewed the current and proposed approaches to providing financial support for social care and found that we need a 'third' way of treating income and assets more logically and fairly and in doing so it replaces a complex jumble of limits and thresholds. Although technical details are similar, our approach is easier to grasp with fewer administrative costs, ultimately benefiting pensioners and people in social care.
...our alternative system offers a new way in which people are not penalised and forced to dispose of assets, and that income and assets are split differently enabling people to be treated more fairly. We also think that the introduction of new 'care saving accounts' could help introduce more new money into the system, thereby reducing the stress on the state."
Baroness Sally Greengross OBE, Chief Executive of the International Longevity Centre - UK (ILC-UK) and Vice Chair of the All-Party Parliamentary Group on Choice at the End of Life, commented:
"The ILC-UK welcomes this contribution to the urgent and ongoing debate around how to support our pressurised adult social care sector, so that it can support our rapidly ageing society. At a time the CQC has described as a 'tipping point' for the social care sector, the suggestions contained in this report make an important contribution to a debate that can no longer be postponed."