Conference hears future aged care funding options

User-pay approaches for people who can afford it or measures embedded in superannuation are among alternative ways that need to be considered to fund aged care, an industry professional has told an aged care conference.

Moreover, Australia needs to think about whether it wants an egalitarian or market-driven system, said Darrell Price, principal and national head of health and aged care at Grant Thornton.

He said the current hybrid model, which guarantees a level of aged care to all Australians regardless of means with components of a market-driven system such as residential aged care Refundable Accommodation Deposits priced according to demand in an area, has worked reasonably well.

“This is deeply concerning for all aged care services,” Mr Price said.

“One of the things we need to think about when we think about funding, is do we want this market-driven industry or do we want to continue with a purely egalitarian model.

“However, with freezing old subsidies including ACFI, and other mechanisms throughout the sector, we have seen a significant fall in revenues, margin compressions and other issues affecting the viability of aged care services,” Mr Price told the LASA Ten Days of Congress on Tuesday.

“And that will come down to real considerations about how much investment the Australian community needs to see in aged care,” Mr Price said.

On how to stimulate required investment, Mr Price said he refuted claims there should be no profiting in aged care .

“We really need to rethink the profit-is-a-dirty-word concept when it comes to aged care services.

“We need to understand that where there is a profit motivation, there are not-for-profit or for-profit organisations [and] there will be a degree of competition that arises out of the market-designed system that allows services to be improved overtime and to allow investment in those services,” Mr Price said.

He said when thinking about aged care funding, often people think about the amount of money that government pays.

However, Mr Price said he has identified many Australians and particularly older Australians who are more than happy to pay for their own services or contribute more to them where they can.

“It’s more and more a lot obvious to me, that the opportunities for government is to allow people to pay, who are willing to pay, and who actually believe that they should be paying for this care they receive into the future,” Mr Price said.

He suggested detaching subsidy levels from price points so aged care providers could charge more to those who can afford it.

“There is no further money required from the government where individual people can and will pay for their services, and this can be extended to a range of services in aged care including home care and residential aged care. It’s an important thing to look at,” he said.

Superannuation mechanisms

Mr Price said superannuation, which is already designed to save for later life, is another area to consider adding measures for funding residential and home aged care.

“Why can’t within a superannuation fund, a proportion be put aside for accommodation and or care into the future where it’s preserved for that purpose?” Mr Price said.

Mr Price said there needs to be serious consideration on how superannuation can be utilised to preserve money and capital for services in the future.

“This will also alleviate costs in the federal budget, it also gives people dignity in that they can actually afford to and will contribute to their own care and accommodation in the future,” he said.

The LASA Ten Days of Congress takes place 12 – 23 October as a virtual event.

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