1. Birmingham City Council’s Approach to Care ACT Financial Modelling

2. 2 Background Across the country a number of attempts were made to model the financial impact of the Care Act reforms (In particular the changes to the means testing thresholds and the introduction of the lifetime care costs cap). Unfortunately no model that we had sight of was fit for purpose in terms of modelling the implications. The various models had consistent flaws namely:  Too much use of averages where the standard deviation is high.  Unattainable data requirements.  Incorrect data sources  Incorrect interpretations of the impacts. As a result, we decided to build a model that would address the shortcomings of the other models. The key assumptions that were made were based on our existing cohort of users in particular our full cost payers. The model calculates the impact of both the Care costs Cap and the increase to the means tested threshold accurately for both Older and Working age adults. This also models Residential clients and clients in the community separately.

3. 3 Strengths of Birmingham Model No need to use averages since we have looked at clients individually. No need to work complicated care pathways/ average length of stays since it is implicit within the modelling. A year on year profile has been worked out for the Impact of the Care Cap as opposed to showing it all in one year. Swings and Roundabout theory precludes the need to produce complicated and often wrong wealth depletion calculations. Model segments clients into 9 different cohorts thus allowing to assess impact separately. Self funders segmented into two bands thus identfying out how many clients will become council supported immediately. Robust Self Funder numbers based on provider survey. Demographic Growth can be built in. Easy to use Control Panel that increases transparency and where the variables can be tested through sensitivity analysis. Different elements of the model are linked together which ensures that variables don’t contradict in different parts of the model. Only basic inputs are required. The complicated bits are calculated automatically from the simple inputs. The impact of both the increase to the means testing threshold and the new Care Cap limit has been isolated separately.

4. 4 Issues that Birmingham model addresses Variations by Gender - Since all calculations have been done on an individual by individual basis, the different impact of each gender is implicitly addressed in model. In terms of self funders it is assumed that the gender mix is same as the LA’s full cost payers cohort. Care Pathways/ Average length of stay - Since we already know what the total lifetime cost of care for each client is, there is no need to work out any complicated care pathways. Wealth/ income of self funders - Since we have a large full cost payers population, it is reasonable to assume that the income levels and assets values will be similar to self funders. Depletion of assets- We have worked to a swings and roundabouts theory that the % of clients in each wealth band will remain constant i.e. when a group of clients move from one wealth band to the next, a corresponding amount of clients will leave that band.

5. 5 Key Principles/ Assumptions The current profile of clients in terms of their income contributions/ wealth position remains constant in the future (swings and roundabouts theory) The profile of self funders in term of wealth position/ average cost of package in consistent with Councils full cost payers Bed Based Younger Adults will continue to pay £230 hotel cost (or whatever they can afford ) after Cap exceeds No calculations have been made for working age adult self funders since this cohort is so little that there is no material impact. Clients will not sell their property in the future to fund their care since this will allow them to be applicable for the higher capital threshold. Inflationary impact will have a cost neutral impact on all affected variables THE REMAINING SLIDES WILL NOW GO THROUGH EACH TAB OF THE MODEL

6. 6 Control Panel This tab allows the entry of the different variables and also allows sensitivity analysis to these variables. It also includes graphs that clearly depict the Impact over future years. The date that the snapshot data is based on should be entered into the control panel. A different care cap can be applied to Working age adults. There is also a cell to enter a % for clients who currently receive carers support in a family setting who may present for a service once Care Bill is implemented. The % of Self Funders can be entered for both Bed Based and community settings. There is also a cell to enter a % for clients who are self funders but will not meeting the new national eligibility criteria in the future (Low/ Moderates). Year-on-Year demographic growth can be entered into the model and different %’s can be used for both Older and Working age adults.

7. 7 Care Cap Profile tab This is a view only tab that states the % and number of clients that will hit the cap for each year from year 1 to year 7 based on inputs from other tabs. Profiles are included for 65 and over/ Working age and Turning 18 cohorts. It also separately profiles Bed Based and community clients. This tab also profiles the cost of clients reaching the cap.

8. 8 65 and over Self Funder working tab This is another view only tab that calculates the cost from self funders based on the inputs from the control panel and the data from the full cost payers tab. This works out the number of self funder based on the % of self funders inputted in the control panel. It then excludes the number of clients that would not meet the new national eligibility criteria but adds in the new demand from clients receiving carer support in a family setting. This also splits the total number of self funders into 2 wealth bands (over/ under £118k).

9. 9 65 and over Self Funder working tab (continued) This tab then works out the impact of self funders reaching the care cap. This is calculated by taking the number of the clients that will reach the cap in each year and multiplying it by the average loss of income. The average loss of income takes into account the fact that Bed Based self funders will still have pay for the daily living costs (£230). For community clients the total cost will be picked up by the LA once these clients reach the cap. The cost of increasing the means testing upper threshold is also included for self funders whose assets are under £118k.

10. 10 Bed Based Cohort tabs (LA Supported) These tab’s works out what the impact will be on clients who are in a Bed Based setting with assets under £23,250 at any one point in time. It works out how many clients will hit the cap at any one point in time and thus informing how many clients will have their care element of the package fully subsidised by the LA in each year. This also informs us the amount of income that will be lost on a client by client basis which precludes the need of using averages. There will be no loss of income for any client whose income is below £230 per week since these clients will still have to pay for their ‘hotel costs’ even once their care costs exceeds the cap. It also calculates when people will reach the cap thus allowing to profile the impact of the care cap over 6 years as opposed to profiling it all in one year. This tab also calculates the impact of lifting the lower capital threshold from £14,250 to £17,000 on a individual basis. The maximum income lost for this will be £11 per week per client. The data that is required for each existing client is:  The start date of the client’s first care account applicable package( not the start date of their first Bed Based package).  The client’s total Asset value.  The client’s current CRAG contribution per week.  The client’s total lifetime care costs to date (excluding any hotel costs incurred).

11. 11 Bed Based Cohort tabs (LA Supported) example

12. 12 Bed Based Cohort tabs (Full cost payers) These tab work out what the impact will be on clients who are in a Bed Based setting who are currently full cost payers at any one point in time. It works out how many clients will hit the cap at any one point in time and hence informing how many will have their care element of the package fully subsidised by the LA. This also informs us the income that will be lost on a client by client basis which precludes the need of using averages. £230 per week will still be retained even once clients exceed the cap to cover ‘hotel costs’. It also calculates when clients will reach the cap thus allowing to profile the impact of the care cap over 6 years as opposed to profiling it all in one year. This tab also calculates the impact of lifting the upper capital threshold from £23.250k to £118k on a individual basis. This will affect all full cost payers whose assets are under £118k There is no impact on clients with assets over this amount. It is assumed that clients will not sell their property in the future hence why they are applicable to the higher threshold limits. Since some existing users have already sold their properties, the impact in the early years will be overstated but will be accurate once all existing users have been replaced by new users. The data that is required for each existing client is:  The start date of the clients first care account applicable package( not the start date of their first Bed Based package).  The client’s total Asset value.  The client’s current CRAG contributions per week.  The client’s total lifetime care costs to date (excluding any hotel costs incurred).  The clients weekly personal income from pensions etc.. minus £25 living allowance.

13. 13 Bed Based Cohort tabs (Full cost payers) Example

14. 14 Community Cohort tabs These tabs works out what the impact will be on clients who are receiving care in the community at any one point in time. It works out how many clients will hit the cap at any one point in time and hence informing how many will have their care element of the package fully subsidised by the LA. This also informs us the income that will be lost on a client by client basis which precludes the need of using averages. All income will be lost since hotel costs are not applicable. It also calculates when people will reach the cap thus allowing to profile the impact of the care cap over 6 years as opposed to profiling it all in one year. This tab also calculates the impact of lifting the lower capital threshold from £14,250 to £17,000 on a individual basis. The maximum income lost for this will be £11 per week per client.. The data that is required for each existing client is:  The start date of the clients first care account applicable package( not the start date of their first community package).  The client’s total Asset value.  The client’s current CRAG contributions per week.  The client’s total lifetime care costs to date (excluding any hotel costs incurred).

15. 15 Community Cohort tabs Example

16. 16 Turning 18 tabs These tabs work out what the impact will be on clients who have received care since childhood. Since care will be free for this cohort, 100% of income will be last from day 1 for clients in the community. There should be minimum loss for bed based clients since they will have to cover their hotel costs. This also works out the profile of the impact based on the clients start date. The data that is required for each existing client is:  The start date of the clients first Adult care account applicable package  The client’s current CRAG contributions per week.