Legislated review’s failures of omission and commission

The Tune Review was a missed opportunity for a broad debate on financial sustainability, writes Professor Mike Woods.

The Tune Review was a missed opportunity for a broad debate on financial sustainability, writes Professor Mike Woods.

The report of the Legislated Review of Aged Care 2017 is a welcome addition to the policy dialogue on providing care and support to the elderly in our communities. It addresses most of its very specific terms of reference in a reasonably measured manner and draws on evidence to the extent it is available.

Professor Mike Woods. Photo: ©Nathan Rodger

Some recommendations, if adopted, are very positive in reinforcing the move to a more open and competitive market-based system. Included among these is the proposal that the government discontinue the Aged Care Approvals Round for residential care places as soon as possible (and with two years’ notice), and instead assign places directly to consumers.

My primary concern is that the review missed several important opportunities to contribute to the important public debate on the financial sustainability of providing care and support. These were failures of both omission and commission.

In terms of the omission, it is recognised that some elements of this issue were not specifically addressed in the terms of reference of the review. However, section 4 of the Aged Care (Living Longer Living Better) Act 2013 provided two alternative means of taking a wider perspective.

The first was the provision in the Act that the review could address “any other related matter that the Minister specifies.” As the report notes: “The minister did not specify any other matters to be considered as part of this review.”

The second alternative, however, was at the discretion of the reviewer. Section 4 of the Act purposely states: “The review must consider at least the following matters:” (emphasis added). Accordingly, the Act was written in a way that enabled the reviewer to include other matters as being within scope. And even if that provision were not specifically written into the Act, an independent reviewer with an equally independent secretariat can always exercise their judgement that this is an important related matter that needs to be addressed.

To an extent the review did go beyond its specific terms of reference by considering the Commonwealth Home Support Program where it interfaces with Home Care Package issues, assessment processes and the like. Indeed, several of the recommendations directly address the program, including making consumer contributions for services mandatory and integrating the Regional Assessment Service and Aged Care Assessment Team workforces. Each is a sound recommendation and it would have been a further improvement to include the program fully into the scope of the review from the outset.

Such independent judgement was not exercised in relation to financial sustainability.

The most notable omission was that of considering the principles underlying the funding of care, and residential aged care in particular.

The report noted that the Aged Care Funding Instrument lay largely outside the scope of the review, and yet also noted that the instrument’s effectiveness “has long been a source of concern for government and the sector, and has been subject to a number of changes intended to manage higher than expected increases in ACFI funding for residents.” The large numbers of changes to the ACFI, as referred to in the report, have been piecemeal. The latest initiative in this space continues in the same manner. The department has awarded an 18-month contract to undertake a resource utilisation and classification study of residential aged care – essentially counting and costing what is being done, without first establishing a principles-based foundation.

It is worth reflecting that there are two fundamental questions relating to the provision of aged care services:

  1. What care and support do elderly members of the community require to support their independence, wellness and continuing contribution to society?
  2. What are the government’s roles in facilitating the offering of these services by the market (providers and their workforces)? Do those roles include: addressing market failure, such as ensuring open and competitive markets, improving consumer information and providing incentives to supply thin markets; regulating on matters such as safety and quality; and/or ensuring equity of access, including by providing subsidies to those in need?

There are, of course, many related issues, such as ensuring that the services meet the changing needs of the elderly, that the elderly have choice and control, that they have high-quality palliative and end-of-life care, that they are treated with dignity and respect, that their carers are supported, and that they and their carers can readily navigate their way to the appropriate services.

The review could have made a valuable contribution to a part of the second question by addressing the principles that should underpin the funding of services: getting an appropriate and sustainable balance between consumers and taxpayer-funded subsidies. This would also have established a basis for better program design.

Apart from this omission, the review also set back the debate on the financial sustainability of aged care services through two acts of commission. The report addressed ways in which a person could draw down some of their accumulated wealth to contribute to the cost of services, and also addressed whether some should be protected from open-ended costs of care services. However, the review made somewhat blunt and unhelpful recommendations on these two issues. Unsurprisingly, the government made immediate and equally blunt and unhelpful responses in rejecting those proposals outright. It is now left to stakeholders to develop a more meaningful dialogue with the government.

I suggest the discussion start by developing a debate on the principles that should underpin the role of government in providing subsidies for care and support: for what services, to which people, with what balance between consumer and taxpayer funding in each case?

Professor Mike Woods is Professor of health economics at the Centre for Health Economics Research and Evaluation at University of Technology Sydney.

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Tags: acar, aged cae funding instrument, aged-care-funding, aged-care-legislated-review, living-longer-living-better, mike-woods,

1 thought on “Legislated review’s failures of omission and commission

  1. The call to fully deregulate the allocation of places in residential aged care is fraught with many dangers.

    Which bank will lend millions of dollars to a provider who has no guarantee of residents? At the moment providers who hold an allocation of places can secure the funding to build facilities.

    Will new aged care facilities (and of a high standard) be built in outer metropolitan and rural and remote areas? Many for profit providers will ignore regions for the lucrative inner city services therefore reducing supply in areas of need.

    The current model may not be perfect but it does guarantee security and funding as well as an equitable distribution of aged care accommodation across all parts of the country.

    Those who promise competitiveness and competition just need to look to electricity prices as the prime example that promises given will not lead to better outcome for our elderly consumers.

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