How fair is the Fair Deal?
PERSONAL FINANCE:The Fair Deal scheme is working,particularly for middle-class nursing home residents, but for those on a State pension, it is proving more problematic and things will get a great deal worse if it is hit in the Budget
JUST OVER ONE year ago, the delays, deferrals and legislative difficulties that had beset the Fair Deal nursing home support scheme were finally overcome and the new system was implemented. It was introduced not before time. Last week, the Ombudsman Emily O’Reilly published Who Cares?, a report into the rights to nursing home care. It concluded that access to nursing home care over four decades had been marked by “confusion, uncertainty, misinformation, inconsistency and inequity”.
The damning report found that the State had deprived thousands of old people of their legal entitlement to nursing home care over four decades and said that successive governments had repeatedly failed to amend the law to clarify entitlements to nursing home care, forcing vulnerable elderly people to seek care in private homes, often at huge cost to themselves and their families.
In response to the report, the Minister for Health, Mary Harney, said she had recognised “there was a serious problem of inequity and brought forward the Fair Deal.” She said 13,000 families were benefiting from it “and they don’t have to sell their homes or remortgage their homes to pay for nursing home care.”
Fair Deal has certainly solved some of the problems that faced elderly people in need of long-term residential care but it has not proved a panacea. And if the swingeing public expenditure cuts coming down the tracks hit the Fair Deal budget, then those seeking nursing home care could find themselves worse off than ever.
Under the new system, the patient contributes 80 per cent of their income towards the cost of their nursing home care, plus a charge of five per cent of the value of their assets (above certain thresholds) per year.
The State then pays the shortfall. So, for example, if the cost of a person’s care is €1,000 per week and their contribution is assessed to be €300, the HSE pays the weekly balance of €700.
If the individual’s assets include land and property, then the five per cent contribution based on these assets can be deferred and paid out of their estate after they die.
The thinking behind the scheme was that older people would no longer be forced to sell their home during their lifetime, while their relatives would not have to subsidise care costs. It was also hoped that replacing the existing means-tested subvention system – which was introduced in 1993 and was widely viewed as unclear, unfair and inconsistent – would create a level playing field.
So how is the Fair Deal working in practice since its launch in October 2009? According to Mairead Hayes, chief executive of the Irish Senior Citizens Parliament, it appears to be going smoothly for middle-class people. “We’re definitely not getting the panic phone calls we used to,” she says.
Close to 16,000 applications for financial support have been received by the HSE, and by the end of September over 11,000 had been processed. Only 200 applications have been turned down.
The HSE said that these were declined for two main reasons: either it was determined that the applicant didn’t need long-term residential care, or their assessed contribution was found to exceed the cost of care and therefore no State support was payable.
However, Hayes says that issues are arising for people whose only source of income is the State pension, which is currently €230 a week. Under the rules of the scheme, 80 per cent of their income – or €184 – goes towards the cost of nursing home care, leaving just €46 in weekly spending money.
This is a pretty meagre subsistence rate by any standard, but particularly when one considers that the Fair Deal contract does not cover all of the essentials of daily life. The scheme provides for nursing and personal care, basic aids and appliances, bed and board and laundry services.
Unfortunately in many cases, “extras” such as hairdressing, incontinence wear, occupational therapy and physiotherapy sessions are not covered by the scheme and have to be paid for separately. Most older people have a medical card, which should cover some of these additional services, but other costs such as clothing, newspapers, prescription charges (capped at €10 a month for medical card holders) and so on still have to be met out of this tiny allowance.
A far bigger problem, however, is the threat of budget cuts. In 2010, €979 million was allocated for the Fair Deal scheme, and it appears that this will be sufficient to process all applications received this year. However the minister has indicated that up to €1 billion will be cut from the HSE’s budget next year. If funding for the Fair Deal scheme is hit, then we are likely to see the return of waiting lists for nursing home places. If this happens, the clock will be turned back to a pre-1993 situation, warns Eamon Timmins, head of advocacy at Age Action Ireland.
Timmins explains that before the Fair Deal scheme was implemented, people in need of nursing home care had three choices: they could wait for a public bed to become available; they could pay for a place in a private nursing home; or they could apply for a subvention, which was like a grant towards the cost of a nursing home bed. If waiting lists start to reappear, people will be limited to two choices: go privately or wait. “They won’t have the middle ground of subventions and will be worse off,” he says.
Tadhg Daly, chief executive of Nursing Homes Ireland (NHI), says that while the scheme has “most definitely changed the landscape”, the jury is still out from the operators’ point of view. In particular, private nursing home operators are unhappy with the rates negotiated with the National Treatment Purchase Fund (NTPF) for providing care through the Fair Deal scheme. The average rate negotiated in the private sector is €831 a week. This compares with an average published cost of about €1,300 in public nursing homes.
The private nursing home sector has found itself under increasing pressure this year due to the implementation of new quality standards. According to the NHI, its members have spent an average of almost €78,000 per nursing home in order to comply with these standards. On top of that, staff costs, commercial rates and energy costs continue to rise.
Negotiations are ongoing between nursing home providers and the NTPF for next year’s fees. “Negotiating rates downwards is not an option,” Daly says. “The operating costs for providers is increasing.” It seems inevitable that nursing home rates will be pushed upwards, which will stretch the Fair Deal budget further. In order to compensate for this, and for any budget cuts that should arise, the Government may decide to follow the recommendations of An Bord Snip Nua and take a larger slice of peoples’ assets, particularly given that the value of assets has plummeted since the Fair Deal was unveiled back in 2006.
So what, if anything, can be done? Hayes says that the funds required to cater for older people in need of nursing home care should be provided, but she stresses the importance of continuing to provide care in the community where possible as this will “eventually lessen the bill”.
“The more homecare packages, day-care centres and facilities that can be provided in the community, the less need there will be [for long-term residential care],” she says.