Analysing the costs and benefits of social care funding arrangements in
Julien Forder and José-Luis Fernández
PSSRU Discussion Paper 2644 July 2009
PSSRU Personal Social Services Research Unit.
Available online PDF [55p.] at: http://www.pssru.ac.uk/pdf/dp2644.pdf
“…..The funding of long-term care is highly complex and involves a range of different funding sources and funding organisations. It is quite common for a person’s care needs to be simultaneously supported by funds from local councils, the benefits system, and their own income and savings. At present, public financial support is mostly subject to a detailed and complicated financial means-test, that assesses in depth applicants own financial situation.
Once broad eligibility for financial support is determined, the amount of funding support that a person receives depends largely on the intensity and cost of the support they are assessed as needing. The latter is established after a detailed needs assessment. Moreover, the type of care that a person uses also affects the nature and level of funding support. There are at present, for example, separate funding rules for residential and non-residential care. The upshot is that overall older people end up paying a significant proportion – around a half – of total expenditure on social care out of pocket.
Funding social care services is likely to become more difficult in to the future. Underlying demand for care is set to rise significantly as a result of the ageing population and trends in chronic diseases. The price per unit of care service has been and is likely to continue to rise faster than general inflation. Although there is perhaps scope to improve the use of resources, the pressure to find more money looks to be significant. These resources will need to be raised from public funds, from the pockets of individuals and their families, or both…..
This report outlines the analytical work that was commissioned by the Department of Health to feed into the development of a Green Paper. It describes the methods and assumptions underlying the model used for analysing long-term funding systems.
The paper gives details of potential and actual users of care, their levels of need, and their income and assets. It details the system of support available, the current funding arrangements and the benefits system. The report looks at costs and to the degree to which population need is being met. It concludes with an assessment of the current system.
Three considerations are particularly salient when assessing the case for reforming the funding of long-term care.
First, how does the reform affect the benefits or outcomes of the system for its stakeholders (e.g. service users, informal carers, service providers)?
Second, what are its costs implications – for the public purse and for individuals?
Third, what is the distribution of these costs and benefits across the population? In other words, who stands to gain and who to lose from any changes?
The goal of the analysis is for these three considerations to be made in specific, quantifiable terms so that the size of changes can be assessed. This means not only determining the change in costs but also (and as far as possible) the changes in outcome. Importantly, these changes ought to be assessable at the individual person level as well as in aggregate terms, in order to assess the distributional effects of any reform….”
2 The PSSRU micro-simulation model
3 Characteristics of the population
4 Model outputs: derived variables
5 The needs test and the care ‘offer’
6 Behavioural assumptions
7 Unmet need
8 Applying funding arrangements
9 Assessing the current system
9.1 Distribution of net payout at the point of need and distribution of charges
9.2 Distribution of unmet need
9.3 Distribution of spend-down
9.4 Reforming AA
10 Concluding points
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