Aged care faces major overhaul

“Hard work” lies ahead says Ian Yates, Council on the Ageing chief executive, despite yesterday’s (Monday, 8 August 2011) much anticipated release of the Productivity Commission’s final report, detailing recommendations on ways to create a sustainable Australian aged care sector.

The report recommends a complete restructure of financing for aged care to allow people to retain the family home and pay for accommodation and care by drawing equity from the asset.

The commission calls for the family home to be counted in calculating a person’s wealth, to determine their capacity to contribute to their own aged care.

Wealthier individuals would be required to contribute up to 25% of the costs of their aged-care services – items such as help with showering and toileting as well as house cleaning and shopping – to a lifetime cap of $60,000. However, the government would continue to fund about 85% of aged-care costs.

The commission also recommends accommodation bonds to be allowed for all residential care, but this would be optional; allowing people to choose to pay daily or weekly “rent”. However, charges would be uncapped to “reflect differing standards of accommodation.

“Older people would be able to choose the standard of accommodation they want and could afford, just as they have done when living in the community,” the report states.

Speaking to DPS eNews immediately after the Productivity Commission tabled its final report from its Caring for Older Australians inquiry in Canberra, Mr Yates says it will now be a period where “we sit around tables and dig into the detail of the report, and find what we think will work and what will not work”.

Mr Yates, who believes the final report’s key implementations are “very similar” to January’s draft report, says the commission’s recommendations aim to encourage greater choices for the more than one million people using aged care; in turn helping them live in their own homes for as long as possible.

Its focus will move towards a user-pays system. Key to the reforms is facilitating Australians’ overwhelming desire to continue living in their home as long as possible, and in many cases until they die, the commission says.

The government will also be establishing a new central “gateway” system that assesses the individual needs of an older person which will help to co-ordinate their care.

Other proposals include “progressively” deregulating the number of care packages provided in the community and the supply of hostel and nursing home beds.

To ensure people will not have to sell their homes to fund aged care, the commission wants the government to offer loans against their principal residence. For those who do no opt to sell, they would be able to invest the proceeds in a government savings account.

Overview of key recommendations:

• Access to a government-sponsored line of credit (the Australian Aged Care Home Credit Scheme) to help meet their care and accommodation expenses without having to sell their home. A person’s spouse or other ‘protected person’ would be able to continue living in that home when that person moves into residential care.
• If they choose to sell their home, they would retain their Age Pension by investing the sale proceeds in an Australian Age Pensioners Savings Account.
• Direct access to low intensity community support service and the ability to choose whether to purchase additional services and higher quality accommodation.
• Limits on the number of residential places and care packages would be phased out, while distinctions between residential low and high care, and between ordinary and extra service status would be removed.
• Safety and quality standards would be retained, with an Australian Aged care Commission responsible for quality accreditation and recommending “transparent and efficient” prices to the government.
• The new system will see limits on quantities of bed licenses and care packages lifted with a five-year transition to an open market; and;
• Providers will compete on a range of dimensions such as the professional and relationship skills of their workers, the quality of food and cultural awareness and languages on offer.

The recommendations are said to be the beginning of the “biggest shake-up the aged care industry has seen in decades”.

More than one million people already access aged-care services, a number tipped to reach 3.5 million by 2050 as baby boomers age. It is anticipated the public cost of aged care will rise from $10 billion to $50 billion a year in 40 years.

Aged Care Association Australia WA (ACAAWA) chief executive, Anne-Marie Archer, says aged care reform should not be a “platform for political point scoring” and stresses the importance that the government addresses the recommendations as a whole, and does not “cherry pick the items considered politically palatable”.

“The future of the aged care system is too important to be neglected any longer,” Ms Archer says.

A seminar will be held today (Tuesday, 9 August 2011) by ACAAWA, where keynote speakers, including ACAA chief executive, Rod Young, will address and discuss the recommendations of the final Productivity Commission Report.

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