Self-funders and relative needs

1. Self-funders and relative needs Project Advisory Panel 17 April 2013

2. Principles • The Relative Needs Formula (RNF) for adult social care is a mechanism that determines each local authorities’ share of total social care funding from central Government. • Fundamental principle: to ensure equal opportunity of access to services and support for equal need • Conventional interpretation: that each council should have sufficient net funding so that they can provide: • … an equivalent level of support (services or otherwise) to all people in their local population • … who would satisfy a national standard eligibility conditions • Net publicexpenditure requirement (NPER)

3. Net public expenditure requirement (NPER) • Determined by: • Access and support test, whichdetermines how much support a person receives (including nothing) depending the severity of their assessed need. • Funding system test: whether a person is eligible for any public support on the basis of relevant non-need criteria, usually concerning the person’s financial circumstances.

4. External factors • NPER will vary from LA to LA according to factors beyond the control of the LA: • Needs characteristics of population (Access and support test) • Wealth-related characteristics (funding test) • Also, • Supply conditions (at least in the short-term) • RNF aims to adjust funding share to LAs to account for NPER consequences of different need and wealth patterns between LAs

5. How is the RNF determined? • Aim: to estimate how NPER varies between areas according to the needs and wealth characteristics of those areas • Estimate a formula on this basis: • NPER = f(needs, wealth) • Conventional method: • Use historic LA net expenditure as measure of NPER • Measure NPER for small area e.g. wards, or Census areas (LSOAs) • Measure needs and wealth characteristics for each small area e.g. age structure, benefits uptake rates… • Use statistical methods (multivariate regression) to determine the relationship between NPER and external factors

6. Social care reforms • What will funding reforms mean for the RNF? • Dilnot reforms • Capped risk protection • Mostly affects self-payers in care homes • Deferred payments • Loans from councils save people from (initially) selling their homes • Minimum eligibility? • Will mean a change to future access and funding tests… • … historic expenditure will be a poor guide • So use different methods for currently-supported population and newly-eligible population • Likely to imply separate funding formulae: current, capped risk and deferred payment

7. Currently-supported NPER • For currently-supported population: • Use conventional small area method • Small area used: LSOA • Councils to download (current supported) service use data by their pre-care LSOA • Use unit costs to determine ‘current NPER’ • Use need and wealth characteristics of pre-care address LSOA • Need e.g. age structure, Pensioners living alone rate, AA uptake rate • Wealth e.g. Pen Cred uptake rate, average house price • Fit multivariate need and wealth models

8. Newly supported people following Dilnot reforms • Need to estimate the NPER of people that would have been self-payers currently (pre-reform) but will become state supported in the future (post reform).. • … Dilnot NPER • A number of methods: • Use data on the current number of self-payers (pre-reform) • Simulation modelling

9. (1) Using current self-payers • Dilnot NPER = • (a) the number of self-pay recipients • (b) the unit costs of care that councils would have to pay • (c) and the proportion of the self-pay population that would become eligible under Dilnot. • Bulk of Dilnot recipients will be in residential care • So we need a way to predict numbers of self-pay residents (SPRs) by small area based on need and wealth • SRP in LSOA = Total beds x occupancy – supported residents • Current address of self-payers is their ‘pre-care’ address • Needs: as above • Wealth: as above, but house price not applicable because most residents will have sold their homes. • Instead use average price of care home: high priced care homes have higher proportion of self-payers • Alternatively use population surveys such as ELSA to link self-pay care home admission with wealth and need characteristics in the survey • But sample sizes are small.

10. Data sources • CQC has care home beds by LSOA • LA downloads = supported residents by LSOA • Need data on: • Occupancy rates • Prices • Proportions self-funded • Use survey and Census data • Our own survey of care homes • Existing surveys

11. Issues • For deferred payments, pre-care homeaddress is the responsible LA • So we may need to collect some data on pre-care home address for self-payers • Need a bespoke survey data collection • Practically no data on self-pay non-residential • Must assume same relative need pattern in this case • Still need a estimate of the proportion of SPR who hit the Dilnot cap and/or seek a deferred payment • Calculated using simulation (also see below) • Dilnot NPER will be an approximation of actual expenditure implications of Dilnot

12. (2) Simulation and profiling • Simulation uses data on the underlying distribution of need in the population.. • … estimate numbers and types of service users directly on that basis • … uses both estimated relationships (e.g. demand for care services) and deterministic rules (e.g. means-testing rules) • rules reflect prevailing service model and funding system • These ‘rules’ can be altered in light of reforms • Can be used to predict numbers of people receiving support on the basis of the Dilnot reforms directly using their needs and wealth characteristics • RNF for Dilnot funding requirements synthesised directly • Or, the proportion of SPR who hit the Dilnot cap and/or seek a deferred payment can be simulated

13. Discussion points • New RNF(s) mostly needed to allocate ‘Dilnot funding’ to councils • Likely to embody a different pattern of need/wealth than current council spend • But… • No actual experience to go on when estimating Dilnot funding requirements • Generally poor data on self-payers • Some LAs collect data on SPs but far from systematic • So are we using a reasonable method given these data problems? • How could the method be improved? • Will it be credible (enough)?

14. This research has been commissioned and funded by the Policy Research Programme in the Department of Health.  The views expressed in this presentation are not necessarily those of the department.