Removing the rations: best way forward, or a fiction?

The debate about whether government should remove the caps on aged care places is back in full swing. The National Aged Care Alliance today releases its blueprint calling for the phased removal of the rationing of places across aged care, however others argue that the idea of an entitlement is a fiction.


The debate about whether government should remove the caps on aged care places is back in full swing. The National Aged Care Alliance today releases its blueprint calling for the phased removal of the rationing of places across aged care, however others argue that the idea of entitlement is a fiction. 

The question of whether the government should end its control of places and move to an entitlement-based aged care system as proposed by the Productivity Commission will feature prominently in the five-year review of the aged care reforms, slated for 2016-17.

At the time of announcing the Living Longer Living Better reforms, former minister for ageing Mark Butler emphasised the financial risk for government of an uncapped system and said the sequencing of aged care reforms needed to be right.

To get the sector ready for that ultimate goal, Butler argued workforce sustainability, greater transparency and informed choice, and mature competition had to be addressed as a prerequisite.

Three years on, the current Coalition Government is talking up the benefits of a market-based system and has signalled its support for loosening up supply, but within the existing budget.

Quantifying unmet demand

As a first step towards removing supply constraints, COTA Australia chief Ian Yates says accurately modelling the level of unmet need will be critical, and data captured through My Aged Care will help provide the most accurate picture yet.

“For the first time, we will know who has been assessed as in need but is unable to get a service and who is waiting for what level of support,” he says.

Nick Mersiades, director of aged care at Catholic Health Australia, says modelling the costs of aged care in a demand-driven system should take into account various scenarios, including more equitable consumer contributions based on capacity to pay assessed on total wealth, greater emphasis on reablement, consistently applied national eligibility assessment and reduced red tape.

There is also debate within the sector as to the extent to which the planned significant growth in the number of home care packages from 66,000 to around 100,000 by 2017, plus an additional 40,000 over the five years to 2021-22, will meet unmet demand.

As further steps are required to get to an uncapped aged care system, it is unlikely that supply caps will be lifted in the short-term but it remains COTA’s objective, says Yates.

As Australian Ageing Agenda today reports, the National Aged Care Alliance will release its new NACA blueprint on the next stage of reform, which calls for the phased removal of the rationing of places across aged care and the move to individual funding in both community and residential care.

What’s wrong with the current system?

Ian Yates
Ian Yates

The 2011 Productivity Commission inquiry report recommended the progressive relaxation and eventual removal of supply constraints, noting that caps restricted the availability of services and limited choice and competition between providers. The PC proposed a controlled expansion in community care packages before abolishing supply restrictions altogether.

Yates says the aged care provision ratios curtail service innovation and have created oversupply in some regions and undersupply in others.

Waiting lists, particularly in home care, can also compromise the timeliness of access to care, put pressure on healthcare costs and contribute to carer burden. The National Health and Hospitals Reform Commission noted that capped supply and high occupancy created few incentives to attract aged care clients by delivering better quality care.

A consumer-driven system

Hal Kendig, professor of ageing and public policy at the Australian National University, says Senator Fifield’s consistent public statements on moving to a consumer-driven aged care system are promising directions, which, if implemented, should deliver a more responsive and efficient aged care system.

Hal Kendig
Hal Kendig

“Central determination without market signals does not lead to the best use of resources and does not best meet consumer needs and preferences,” he tells Australian Ageing Agenda. He says:

“There is also a question about does the public want to keep providing funding to service providers that are not as responsive as other organisations.”

In a market approach, Kendig says strong-performing providers delivering what people want are likely to increase their market share, while poorer performers will be squeezed out.

Another important change in a market environment is that the financial risk is carried by the provider that now has to prove they have something that consumers will pay for, within an environment of regulatory controls over quality, he says.

Vaughan Harding
Vaughan Harding

The move to a demand-driven system will also require strong protections against areas of market failure where supply is limited such as in rural and remote regions and areas of socioeconomic disadvantage, Kendig says. To address this, the PC recommended providers should continue to be required to provide a suitable proportion of supported places on a regional basis and these concessional places could also be traded among providers.

Vaughan Harding, CEO of Juniper and president of ACSA, says he supports a move away from a centrally planned aged care system, while maintaining equitable access to services for vulnerable clients and special needs groups.

“Competition has good and bad aspects to it, but it does cause the participants to lift their game and to become more focused back on the needs of the consumer,” he tells AAA. “However, our area of activity is one of human services and you wouldn’t want the competitive forces to crowd out voluntary and community-based services, because it is all relationship-based.”

The entitlement myth

Glenn Rees
Glenn Rees

Glenn Rees, chair of Alzheimer’s Disease International and a former senior bureaucrat, says the idea of an entitlement-based system in aged care is a fiction in the context of finite government resources. While uncapping allocations sounds conceptually appealing, Rees holds significant concerns about how it would be implemented.

“I’m concerned that Treasury and Finance can negate entitlement and make it illusionary in so many ways if costs become a threat. For example, by increasing user charges, excluding different types of services, delaying assessments and increasing financial caps to be paid before support kicks in,” he tells AAA.

Rees says:

“Entitlement dreams up this notion that somehow there will be a new Valhalla of access to services, well I don’t believe it. I don’t believe that Treasury and Finance think that way, and the end result for consumers might be a much more difficult world where what government will provide will be much less transparent and very frustrating in understanding how assessment processes work.

Instead of getting access to more services, :the consumer might find themselves squeezed in different kinds of ways,” Rees argues.

While the current aged care provision ratios suppress demand, they also provide certainty about government expenditure, he says. “If governments want to increase their commitment let them do so by increasing the ratio preferably by increasing the numbers of care packages.”

Other options for maximising consumer choice and control are to trial cash payments in respite care, further develop CDC models and offer care entitlements that can be used across both residential and community, says Rees. “My short-term hope is that greater supply of community care places will force the residential care sector to be more responsive to consumers.”

Bob Davidson
Bob Davidson

Bob Davidson, a researcher on the marketisation of human services and a former commonwealth department official, agrees the introduction of an entitlement system in aged care would not necessarily guarantee an end to rationing, especially in a constrained budget climate. He tells AAA:

“Any government funding is, by definition, rationed. You can ration it as we currently do in aged care by limiting the number of places, or you can ration it by reducing the eligibility and/or the level and type of assistance people can get.”

Davidson points to the experience of the UK as a case in point. In that country, local authorities have had to increasingly apply restrictive eligibility criteria to publicly-funded home care, which is commonly now available in practice only to those with the highest needs.

This is an edited version of ‘Talking Points’ which appears in the current May-June issue of AAA.

Tags: acsa, australian-national-university, Bob Davidson, catholic-health-australia, cota-australia, glenn-rees, hal-kendig, ian-yates, juniper, living-longer-living-better, mark-butler, national-aged-care-alliance, nick-mersiades, slider, vaughan-harding,

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