Let's get aged care funding right

The Federal Government has signalled a delay in implementing the new Aged Care Act, which should give it time to nut out the details of any changes to funding arrangements. 

It comes only weeks after the Aged Care Taskforce’s final recommendations were made public and five years since the previous government responded to the final report of the Royal Commission into Aged Care Quality and Safety.  

As the Royal Commission noted, meaningful change cannot happen without sustainable funding. Where this funding will come from has been a key stumbling block in a complex reform process. 

As we reported recently, the Taskforce released its final report outlining 23 recommendations on March 12. 

This as an important milestone on a long road towards a safe and quality system of care, but the next step – designing the changes in detail for legislation – will be the most important and most fraught because these changes will be carefully scrutinised by parliament. 

The Taskforce report addresses the key question of where the additional funds will come from to improve the system. 

According to the Taskforce report, government plays a significant role in funding aged care. Around 75% of the total cost of residential aged care is funded by the Federal Government (via general revenue), with the Federal Government funding 95% of the total cost of home care services. 

With greater numbers of older people and many living longer, government revenue will need to grow to pay for this. The Taskforce has advised against a levy or other taxes, citing intergenerational fairness and cost-of-living concerns. 

Instead, it focuses on expanding existing co-contribution arrangements for those who can afford to pay, but with a strengthened safety net for those who cannot. 

It’s important to note, some people already contribute significantly towards the cost of residential care, notably for everyday living costs, such as food and accommodation, depending on their financial circumstances. 

The Taskforce report makes it clear that government must be the main funder of direct care services such as nursing care and that any increases in co-contributions focus on non-care living costs. 

It points out these are costs people pay for themselves throughout all stages of life. 

It also recommends any changes to co-contributions be grandfathered for those already in residential care and any changes to co-contributions in home care occur only as people’s needs change. 

While the report provides a general roadmap for funding reform, there are details about how changes to co-contributions will work in practice. 

The Taskforce recommendations are not the final word and have to be considered by the government. 

While some seniors have told us they are willing to contribute more, this is only if changes are reasonable, fair, and result in higher quality care. 

In this regard, National Seniors believes the Federal Government should consider the following: 

• The government must continue to consult about changes to funding arrangements, especially those related to co-contributions 

• Any changes to co-contributions must be reasonable, introduced incrementally and be grandfathered for those already in the system 

• Further transparency and accountability measures must be put in place to ensure funding, especially consumer contributions, are spent wisely and efficiently  

• Care services should be of the highest quality for all older people accessing aged care, regardless of their ability to co-contribute 

• There is a need to broker multi-partisan support for funding reform, because fixing aged care must be above politics. 

In terms of transparency, providers should be required to open their books to forensic auditing to restore confidence in their management of funding. 

If these things can be delivered, the government will have the best chance of gaining community acceptance. And older people will have the best chance of receiving the care they need and deserve.