Methods for Developing Adult Social Care Relative Needs Formulae

Project Advisory Panel4 July 2013

Principles• The aim is to calculate the level of funding councils need to meet

their social care obligations. This is the net public expenditure requirement (NPER).

• Determined by two tests: • (1) the care and support test:

– whether people are eligible on the basis of need and how much support a person should receive

• (2) funding test – whether people are eligible according to their means.

• NPER levels per capita will be different between LAs because a varying number of the LA population will satisfy these tests, variation mainly driven by differences in the severity of need in the population and the wealth characteristics of the population.

Principles

• The total net public expenditure requirement (NPER) for each group is the sum of the LA-supported NPER and the Dilnot NPER. – The latter is the additional cost on LAs that arises

from the Dilnot reforms and comprises:• Capped phase care costs• Assessment/metering costs in the pre-care phase• Deferred payments• Increasing the upper capital limit for those in

residential care

Methods: LA-supported NPER• LA NPER is estimated using current LA expenditure data• A sample of LAs is selected and asked to provide the total number of

people using council-funded services in each small area they lived before getting care (pre-care LSOA)

• Applying unit costs, total expenditure is calculated. This amount is the LA-supported NPER.

• Regression analysis is used to estimate the association between NPER and the need and wealth-related characteristics at the pre-care LSOA

• We initially run analyses separately for the older people and younger adult client groups.

• The analysis produces a formula showing how NPER varies between LAs according to differences in need and wealth factors beyond their control.

• We may need to make some further adjustments to reflect the new draft regulations on minimum eligibility

Methods: Dilnot NPER• Dilnot NPER needs to calculated directly (because there is no

historical basis on which to estimate a figure).• We estimate the additional costs that would have arisen if these

reforms were already in place and then use local area need and wealth-related characteristics to predict the value of this estimated Dilnot NPER.

• We distinguish:– pre-cap metering costs – post-cap care costs (noting new draft regulations)– extra cost component of the Dilnot NPER relating to the extension of

the means-test • There are treated separately because they have slightly different

drivers• We estimate the system as though in steady-state .

Methods: Dilnot NPER• Due to the difficulties in estimating Dilnot NPER, we use three approaches and

triangulate the results:– Using self-payer numbers– Removing the wealth test in LA-supported formula– Using needs profiling

• Self-payer numbers• This is a key indicator of Dilnot NPER• We just focus on residential care (as biggest driver)• Aim is to predict this number of self-payers (i.e. Dilnot NPER) using need and

wealth characteristics of a small area• Number of self-payers = the number of places x % Self-funder x occ rates• Data:

– Places: CQC reg data– % Self-funder and occ rates: Surveys of care homes

• Use regression analysis as before with need and wealth factors• Used mainly to predict post-cap care costs

Methods: Dilnot NPER• Removing the wealth test in LA-supported formula• The LA-supported NPER estimation uses the wealth characteristics

of the people in an LSOA to reflect the implications for NPER of the means-test.

• Under Dilnot, this means-test is removed for people that have accumulated more cost than the cap, at least in regard to care costs.

• In this second approach we use the LA- supported formula for Dilnot NPER formula but remove the wealth effect variables.

• This approach might be most appropriate for: Dilnot metering costs, the extended means-test costs and the deferred payments cost because the LA-supported formula approach uses pre-care addresses, whereas the self-payer approach has current addresses

Methods: Dilnot NPER• Needs profiling• Estimate the numbers of people with disability by wealth band

directly• Use existing datasets on need and wealth characteristics• Apply scaling factors: Dilnot NPER = % of disabled people needing

care and exceeding the cap (per year) x number disabled• Or: estimate numbers of Self-payers directly = Total places x occ –

LA supported places (including out-of-area places)• Most relevant for estimating a formula for the Dilnot care costs

component. • We would use this method to help validate the results from the

self-payer approach in this respect

Data sources

• Local authority downloads of ASC activity• Secondary data on need and wealth indicators

(e.g. Census, ONS)• Data care home occupancy, self-pay proportion

and price bands from surveys of care homes• National cost estimates for Dilnot reforms from

the DH• See Data glossary

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.