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Major Overhaul of Aged Care Funding Recommended


Monday, 8th August 2011 at 5:23 pm
Staff Reporter
A major overhaul of the way aged care in Australia is financed has been recommended as part of the Productivity Commission’s report into aged care.

Monday, 8th August 2011
at 5:23 pm
Staff Reporter


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Major Overhaul of Aged Care Funding Recommended
Monday, 8th August 2011 at 5:23 pm

A major overhaul of the way aged care in Australia is financed has been recommended as part of the Productivity Commission’s report into aged care.

Flickr Image: Some rights reserved by ShelterIt 

Importantly the Caring for Older Australians report recommends against forcing older Australians to sell their homes to pay for aged care, as well as recommending a range of new choices for elderly Australians.

The report recommends the Government establish an Aged Care Home Credit Scheme to assist older Australians to make a co-contribution to the costs of their aged care and support, by providing a Government-backed line of credit secured against their home.

The report says that in establishing the line of credit, the Australian Seniors Gateway Agency would arrange a valuation of a home and specify a minimum level of equity. The individual could draw progressively down to that minimum to fund their aged care costs.

Elderly Australians who do wish to sell their home would be able to retain their Age Pension under the reforms, by investing the sale proceeds in an Australian Age Pensioners Savings Account. Under the current system, some elderly Australians who are forced to sell their homes to pay for accommodation and care lose the pension in a means test.

The report says with over 3.5 million Australians expected to be receiving aged care services by 2050, reform is needed to address current and future challenges faced by the aged care industry.

Launching the report, Prime Minister Julia Gillard says aged care reform is needed as the status quo will not meet the needs of older Australians over time.

Gillard says while the Productivity Commission is widely respected, that doesn’t mean they get everything right, and the government now wants to work through the issues and discuss them widely with the sector and those affected.

She says there is a need to discuss aged care reform in an open way.

The Minister for Ageing Mark Butler says while there may not be complete stakeholder agreement with the report’s recommendations, there is an appetite in the aged care sector for reform that there wasn’t 10 to 12 years ago when previous reforms were attempted.

Aged Care Sector Positive

Not for Profit Aged Care providers have reacted positively to the much-anticipated report.

Chair of the Uniting Care Australia Aged Care Network and Executive Director of Blue Care, Queensland’s largest aged care provider, Robyn Batten says the Commission’s funding and financing options are a welcome improvement on the current complex, inefficient and inequitable arrangements.

Batten says while those who can will be expected to contribute to the costs of their care and accommodation, safety nets including mandatory quotas and means testing will ensure that all Australians get the care they need regardless of their capacity to pay.

Batten says currently, too many Australians need to sell the family home to pay for aged care accommodation. The Commission’s proposal for an Aged Care Home Credit Scheme would enable people to borrow against their share of the family home without being compelled to sell it, or require a partner not needing residential care to leave the home.

She says if people do choose to sell their house, they can avoid having its value included in the pensions means test by using the proposed Pensioners Saving Account.

Batten says taken together, the recommendations about uncapping the supply of aged care services and future financing, if implemented, would deliver a robust and diverse aged care system without clawing away the family home or people’s pensions.

Uniting Care Australia’s National Director, Lin Hatfield Dodds says after decades of reviews, recommendations and neglect there is now a clear direction for comprehensive aged care reform, with the report ‘substantially delivering’ on the range and depth of reform needed.

Hatfield Dodds says UnitingCare strongly supports the report’s recommendation to shift from a rationed aged care system to a system based on entitlement. Rather than being entitled to be on a waiting list, older Australians will be entitled to aged care services.

She says UnitingCare also welcomes the report’s recognition that Indigenous Australians, and rural and remote communities require special arrangements to meet their particular needs.

Aged and Community Services Australia (ACSA) CEO Patrick McClure says now is the time for government action on aged care reform.

McClure says it currently costs about $200,000 to build an aged care bed, but at present the funds required are simply not in the system.

He says is needed is a scheme in which the people who can afford to contribute to the cost of their care and accommodation, do so. Equally important though is to ensure that a safety net is in place to assist older people who cannot afford to pay.

McClure cautioned the Government to be mindful of the fact that any solutions will be based on a package of measures which will only work if implemented in concert with each other.

Proposed Reforms

The Caring for Older Australians report says that under the proposed integrated package of reforms, older Australians would:

  • be able to contact a simplified ‘gateway’ for: easily understood information; an assessment of their care needs and their financial capacity to contribute to the cost of their care; an entitlement to approved aged care services; and for care coordination — all in their region receive aged care services that address their individual needs, with an emphasis on reablement where feasible
  • choose whether to receive care at home, and choose their approved provider
  • contribute, in part, to their costs of care (with a maximum lifetime limit) and meet their accommodation and living expenses (with safety nets for those of limited means)
  • have 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 an older person moved into residential care
  • choose to pay either a periodic charge or a bond for residential care accommodation
  • if they wish to sell their home, retain their Age Pension by investing the sale proceeds in an Australian Age Pensioners Savings Account
  • have direct access to low intensity community support services
  • be able 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. An Australian Aged Care Commission would be responsible for quality and accreditation; and would transparently recommend efficient prices to the Government.

Dementia Ignored

Alzheimer’s Australia says the report is a great disappointment as it again failed to dementia as the core business of aged care, letting down people with dementia, their families and carers.

CEO of Alzheimer’s Australia, Glenn Rees, says there is not a single recommendation that addresses dementia or acknowledges the additional costs of caring for individuals with dementia.

Rees says the failure of the Productivity Commission to address dementia is further compounded by the Government’s recent decision to terminate the Dementia Initiative and the guaranteed funding that supports valued services for people with dementia and their family carers.



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