The Albanese government has opened the door to expanding self-funding options for aged care residents, setting up a taskforce to settle the question of how to pay for higher standards of care.
The aged care minister, Anika Wells, will announce on Wednesday that the taskforce will seek to solve the “unanswered question” of the aged care royal commission about how to make the system “equitable and sustainable into the future”.
Wells will also reveal at the National Press Club that the proportion of aged care providers making a loss has fallen from 66% to 54%, despite the average minutes of weekly care increasing, arguing that Labor’s reforms to the sector are working.
The royal commission, which handed down its final report in March 2021, was split on the critical question of how to majorly boost funding to aged care, with one commissioner proposing a Medicare-style levy to pay for the entire system and the other proposing a mix of a levy and higher financial contributions from users.
The basic daily fee that aged care facilities can charge for residential care is capped at $58.98 a day, or $21,500 a year, for all Australians. This rate is fixed at 85% of the aged pension and adjusts to inflation twice a year. Some residents will also pay means-tested care fees, which are also capped, as well as accommodation payments.
Aged care providers have been lobbying for greater contributions from elderly residents. The call was taken up by the opposition leader, Peter Dutton, in his budget reply, saying a sustainable, “dignified, world-class aged care system was only funded by residents or taxpayers” and warning that funding was not a “magic pudding”.
In advance excerpts of the speech, Wells says the government must be “ambitious” and “clear-eyed, not just about the scale of the crisis we inherited but the challenges ahead”.
“We must act now. The baby boomers are coming. Within a decade, our nation will have, for the first time in history, more people aged over 65 than under 18.”
Baby boomers “rightfully believe aged care can offer much more than it has”, she says.
With the proportion of people aged 15 to 64 shrinking, Wells says “there will be greater pressures on the entire community” that will require an “innovative” approach to funding aged care.
“The next generation of people entering aged care are going to want a different model and standard of care than those before them.”
Wells notes that more older Australians want to stay at home as they age, pushing the ratio of residential occupancy down and prompting a re-evaluation of the funding system.
“We have heard calls from across the sector to review this funding arrangement and to take a new approach. We are doing this in an open and transparent way.”
After consultation with the sector, Well signalled a shift towards greater “co-design, support at home, and policy settings that allow innovative models to be viable investments”.
“This is about delivering a needs-based arrangement that makes financial sense. The taskforce will help our seismic shift from provider-focused to person-focused.”
Wells will release the latest quarterly financial snapshot of the sector, from October to December, saying it reveals a “a major shift in financial performance”.
“For the first time in a decade, workers, residents, stakeholders have reason to feel optimistic.”
Wells says the Albanese government’s Australian National Aged Care Classification funding model had made a “tangible difference to providers”, reducing those operating at a loss from 66% to 54%. The January to March quarter is expected to “continue the upward viability trend”.
“And the latest data shows residential aged care providers delivered an improved average of 189 minutes of care per resident a day, moving closer towards the sector average of 200 care minutes which becomes mandatory from 1 October 2023.”
The cost of aged care is expected to rise by 23% next financial year to $29.6bn and become the fifth-largest area of government expenditure.
In the May budget the federal government provided $11.3bn over four years to aged care including paying for the 15% pay rise ordered by the Fair Work Commission.
