Rebecca de Boer, Social Policy Section
Long-term calls for structural reform of aged care may need to
be heeded as the population ages.
Population projections for Australia suggest that there will be
four million people aged between 65–84 years by 2022 with
rapid acceleration of some age groups (over 65, over 85) in the
next ten years. Support and care for older Australians is currently
either provided through the residential aged care sector or by
community based service providers in the home.
The Productivity Commission (PC) has commenced an inquiry to
investigate the options for structural reform of the aged care
system to meet the challenges facing the coming decades.
Community based care
Many older people wish to remain in their homes and supported in
the community for as long as they are able. There are some
government programs in place (such as Community Aged Care Packages)
to support this, but there are gaps in availability and service
delivery. Also, there has been criticism that the administrative
costs of some community aged care packages are too high, reducing
the amount of the subsidy available to fund hours of care.
A trial of consumer directed aged care packages has commenced
and it is too early to tell whether this has been successful. Both
consumers and the community service sector will require significant
additional support if these packages are to be implemented more
widely. Countries such as Japan have made considerable investments
in their community sector to support elderly people to remain in
their homes for as long as possible. Although they have had to
adjust their funding arrangements since the program’s
introduction, this Japanese program has been credited with the
successful development of the community care sector. It also has
enabled older people to remain healthy and active members of their
community and consequently has reduced the need for residential
aged care.
Population projections 2007 to
2057 - Text version
Source: ABS, Population projections,
Australia, 2006 to 2101, Cat. No. 3222.0, released 4 September
2008. Series B (mid-level assumptions for fertility, net overseas
migration and life expectancy).
Financing models
The Government spends around $10 billion per annum on the aged
care sector, with around two-thirds of this expenditure directed to
residential aged care. Older Australians in residential care, who
can afford to do so, also make a contribution to the cost of their
care. There are regulations in place which limit how much aged care
providers can charge.
Aged care providers have long argued that the subsidy provided
by the Government is insufficient to meet the cost of providing
care and that much of the aged care sector is operating at a loss.
The absence of any benchmark for the costs associated with
providing aged care makes it difficult to assess these claims.
Arguments have been made that the current financing arrangements do
not encourage investment in capital infrastructure and there is
insufficient incentive to upgrade or extend existing
facilities.
To address this issue, some stakeholders have advocated that the
costs associated with aged care should be separated so that the
aged care resident would pay for the cost of accommodation (like
rent) and the Government would subsidise the cost of care. Another
proposal to address the financial needs of the sector is for aged
care bonds to be applied to all people entering residential aged
care. Aged care bonds appear to have gained widespread support from
aged care providers, if introduced equitably and fairly. They see
them as a means of providing a revenue steam to support capital
infrastructure and enhance the quality of care. However, they have
attracted vigorous opposition in the past.
The residential aged care sector is more heavily subsidised than
the community care sector. However, on average, care provided in
the community is less costly to government. There have therefore
been calls to redress this imbalance and provide greater financial
support to those who wish to remain in their homes.
Regulation and planning
The aged care sector is one of the most highly regulated in
Australia. There is little dispute over the need for regulations
that protect residents. However, some regulations are considered by
the aged care sector to be an unnecessary burden. The Commonwealth
regulates all aspects of aged care: determining the planning ratio,
setting the subsidy, allocating licenses and assessing older
Australians for an aged care place. Many of these regulations were
introduced as a means of controlling expenditure and managing
supply. Numerous commentators and advocacy groups have proposed
that this model be abandoned to allow greater consumer choice and
more competition in the sector. Under such an approach the
Commonwealth’s role would be limited to the assessment for
aged care places, ensuring quality and safety of care, and
financial protection for consumers.
Aged care workforce
The aged care workforce is ageing and there is considerable
concern among policy makers and service providers about retaining
existing staff and attracting new staff to the sector. Informal
carers (mainly family members) also play a significant role in the
provision of aged care. However, due to population ageing, demand
is expected to outstrip supply in the next 30 years. Irrespective
of where or by whom aged care is provided, Australia is facing a
serious workforce shortage. Aged care workers are some of the
lowest paid in Australia and there is often insufficient support
for informal carers. The question of appropriate remuneration of
the aged care workforce remains unresolved, despite various
campaigns. Flexible models of care could also be explored to ensure
that older Australians receive appropriate, high-level care in a
variety of settings. This may well involve the examination of the
skills and qualifications required by aged care workers and the
breaking down of some traditional barriers between medical and
community based care.
Future prospects
In December 2010, the PC is due to release a draft report, which
is likely to generate considerable interest and debate. While the
shift in the ageing of the population will not be seen for at least
another ten years, reform is considered by many to be necessary to
ensure that older Australians continue to receive high-level care
in both community and residential aged care settings.
Library publications and key documents
Productivity Commission, Caring for older
Australians: Productivity Commission issues paper, PC,
Canberra, 2010,
http://www.pc.gov.au/__data/assets/pdf_file/0003/98283/aged-care-issues.pdf
Productivity Commission, Trends in aged
care services: some implications, PC, Canberra, 2008,
http://www.pc.gov.au/research/commissionresearch/aged-care-trends