Aged care costs on the rise?

Is aged care heading down a path that will end in more of a ‘user pays’ approach? That’s a suggestion being made by some industry pundits after the release of a new federal government communiqué.

The message was delivered this month following a November meeting of the government’s Aged Care Taskforce. This meeting aggregated feedback from several consultation sessions with aged care authorities.

Chief financial officers from residential aged care providers, along with banking and superannuation sector representatives, took part in the consultations.

As part of the taskforce’s deliberation process, it considered a number of themes to come out of a public survey. By highlighting these themes, some suggest that the government is gently preparing Australians for an increase in aged care fees.

Phillip Coorey of the Australian Financial Review is among those who hold that view. “The Albanese government is softening up voters for increased aged care fees for those who can afford it by citing polling that claims people are eager to pay up to 40 per cent of the cost,” he says.

What exactly did the communiqué say about ‘user pays’ aged care?

The taskforce’s November meeting, its sixth so far, had a strong focus on putting together a package of aged care reforms. Those reforms aim to “provide a system that is simpler and more flexible and transparent for older people”.

But that aim comes with a rider of sorts. It should be met “while enabling the aged care sector to meet current and future funding challenges”, the communiqué explains.

Taskforce members noted during the meeting various aspects of research into the public understanding and perception of co-contributions in aged care. The key themes raised through the research, conducted by Kantar Public, are:

  • people mistakenly believe they need to pay for 49 per cent of their aged care costs, which they feel is too much
  • government actually pays 95 per cent of home care costs and 75 per cent of residential aged care costs
  • when people know the full cost of aged care services, they are willing to pay between 30 and 40 per cent of the cost of the service
  • people are willing to pay more for home care services that are essential and increase quality of life and dignity
  • people are willing to pay higher co-contributions for services where the costs of services are transparent and they understand what they receive for their co-contribution
  • 75 per cent of people prefer a ‘user pays’ model where they provide a co-contribution for services received
  • people have limited understanding of how the aged care system works and how changes in the system will affect them.

Are those themes a red flag for higher fees?

The communiqué does not explicitly state an intention to move towards a user pays aged care structure. However, it’s probably not unfair to read such an implication into the message. Flagging the need to meet “current and future funding challenges” is certainly a clue.

On the other hand, the release also highlights the need to “support service quality and innovation”.

Those five words are potentially a double-edged sword. Improving service quality rarely, if ever, comes cheaply. While it is a laudable aim, the taskforce will have to consider how it would be funded. Higher fees would certainly be an option.

But the word ‘innovation’ provides the sword’s other edge, and genuine innovation could potentially deliver services at a lower cost. The term ‘potentially’ is doing some heavy lifting here, of course.

We may not know the truth until May

Mr Coorey’s interpretation of the communiqué is certainly not an unreasonable one. And the fact that the federal opposition has provided qualified support for aged care structure change adds a further indication.

Whatever the decision, Australians are unlikely to know the full implications until the delivery of the Federal Budget next May.

Were you aware of the intricacies of aged care fees? What do you think about the potential changes? Let us know via the comments section below.

Also read: Free expert help to cut through the confusion of aged care options

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