What Will Care Funding Look Like Come 2020?

September 21, 2017 Care Funding

Reform of care funding in the UK happens at about the same pace glaciers move. Although agreement was finally reached and made it to the statute books in the 2014 Care Act, the government once again kicked it into the political long grass, citing concerns over funding as it chose to suspend implementation.

Should it ever reach that stage, the reforms outlined in the Care Act will now take effect from April 2020. But exactly what impact will it have on the financing of care in this country?

If the cap fits

The headline change to funding introduced by the Care Act is the capping of lifetime care costs for over-65s and adults with disabilities at £72,000. The important detail behind this change is that it applies to so-called ‘self-funders’, those people requiring care who pay for it from their own means or those of their family. Their spending on care will in effect be metered, and once their contributions reach the £72,000 limit, they will not have to pay anymore.

At present, self funders make up 44 per cent of all adults receiving care in the UK. Just over a third (36 per cent) have their care funded by their local authority, another 13 per cent are funded by a combination of local authority and third-party contributions, and 7 per cent have their care funded by the NHS.

The obvious question which arises from this is, once the £72,000 cap is reached – who pays for any more care that may be required?

Along with the self-funding cap, the Care Act also creates a duty of care on the part of local authorities to meet the eligible care needs of everyone funding care themselves. This has also been postponed until 2020.

Taken together, the two proposals represent a major shift in the landscape for private care. It means that local authorities, who already play a role in funding half of all adult care in the UK, will now have to pick up any excess beyond the £72,000 limit for self-funders.

This could put an unmanageable strain on local authorities, who have already had their social care budgets stretched to the limit since 2010 by the government’s austerity program.

Price transparency

Another consequence of bringing self-funders under the auspices of local authority care arrangements is that it is likely to draw general attention to the price discrepancies between private care and publicly-funded care. The new rules will make explicit to self-funders what their care would cost if the local authority was paying for it. According to research from Laing and Buisson, care providers typically charge local authorities anything between £31 and £130 per week less than what is considered a ‘fair price’ in the private market.

This could understandably lead to some difficult conversations and put care providers between a rock and a hard place. Hiking local authority prices so they are aligned with what self-funders pay is unlikely to be feasible as councils simply could not afford it. Dropping prices for private clients would make many care provider business unviable.

Until this impasse can be resolved, we may be waiting beyond 2020 for care funding reforms to finally be acted upon.