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health reform

Aug 17, 2011

Aged care reform: the time is right

It is time for action to implement the "landmark blueprint" for aged care reforms recommended by the Productivity Commission’s recently released Caring for Older Australians


It is time for action to implement the “landmark blueprint” for aged care reforms recommended by the Productivity Commission’s recently released Caring for Older Australians report.

So says Professor Hal Kendig Director of the Ageing, Work, and Health Research Unit in the Faculty of Health Sciences at the University of Sydney, and Chief Investigator on the ARC Centre of Excellence in Population Ageing.


We need more than incremental reform

Hal Kendig writes:

Since the Productivity Commission’s report was launched a week ago, it has attracted headline media attention, widespread support, and some criticism from diverse quarters.

Valuable and largely positive commentary has been provided by the Council on the Ageing, Aged and Community Services Australia, and independent commentaries such as at The Conversation and The Voice.

The stakes are high, given that we have reached breaking point with the tensions and contradictions in an aged care ‘system’ that has become increasingly out-dated since the 1980s.

While new services and expertise have been developed, more incremental changes just cannot bring about the fundamental changes needed to address services that are fragmented, under-funded, and divided between both levels of governments and the care, health, housing and income support sectors.

Older people in need and their carers find it very difficult to gain access to effective, flexible, quality, and affordable services when they need them – as they choose in their own homes, for the vast majority, or in various forms of accommodation and care for a minority.

The main issues

The PC report has set a sound foundation for advancing aged care.  The principles, followed through with specific recommendations, include a fundamental reorientation from a funder and provider focus to an entitlement, consumer driven approach – the dollars would follow the people.

A major innovation is the Australian Seniors Gateway Agency (ASGA) that, at a regional level, would provide information on promoting health and independence, assessment for, and entitlement to, choice of services; Centrelink means testing for higher levels of care; and coordination of services if needed.

Increasing both consumer choice and funding through co-payments would be achieved by introducing separate funding streams for care services and (for those in residential) accommodation and living costs.  Far fewer people would have to move into a nursing home to access high levels of care.

The most controversial provisions are for older people to meet their own accommodation costs where they can or for government to meet them on a means tested basis.  Accommodation bonds or periodic payments would free up capital for building that has not been viable for high care facilities.

The Commission proposes pensioner savings and credit schemes that would enable older people to fully access the pension after selling their homes or to pay their aged care co-contributions or accommodation costs  bonds from loans to be repaid when their homes are eventually sold.  Bonds paid on entry to residential care woud continue to be repaid (minus costs) when older people leave the accommodation.

A new Aged Care Commission, independent from government, would be responsible for overseeing a progressive freeing of the market for aged care, setting prices, and overseeing accreditation, regulation, and a data clearing house.

The report does have useful recommendations on how to improve the evidence base available to inform aged care but stops short of recommending funding for it.

Opportunities and implementation

In contrast with early reform attempts, notably the disasters of the 1997 proposals for nursing homes, Government seems to have now learned the lessons of trying to push ahead with contentious policies without consultation.

Aged care providers and consumers have learned how dissension within the sector can jeopardise valuable, major initiatives on which there is widespread agreement.  It is notable that the National Aged Care Alliance (NACA) has now formed a largely consensus view that can be reliably expected to inform and support the carefully considered PC recommendations on which there has already been extensive consultation.  The Minister and Government have committed to further extensive consultation.

The policy opportunities are now right, with other building blocks in place for building integrated health and care services alongside regionalised Gateway services for aged care.

Accountability and coordination will be enhanced by the Commonwealth assuming full responsibility for community as well as residential care (with some WA and Victorian exceptions). Medicare Locals, which aim to align primary health care and the needs of local communities, can promote a more integrated and positive approach to older people.   The recent agreement on hospital reform includes Local Hospital Networks and Medicare Locals (for primary health care) that are a further key element.

Aged care can now emerge as the cornerstone that advances health and care for older people as part of mainstream health and care.

The time to act is right historically – we just have to get the basic care systems right for those who are old now and for the babyboomers who will join them in the decades ahead.  And contrary to Treasury doomsday sayers, there is clear evidence that we can afford investments in good quality care services that are principled, effective and sustainable.

Aged care is central to the trilogy of reform commitments made by the Government for this term: mental health in the current budget,  disability insurance foreshadowed for the years ahead, and aged care for the rest of the current term.

The politics: how it can it happen?

It is time to address head-on the emotive argument that government should pay for nearly all of aged care, irrespective of older people’s financial means, and the political sanctity of owner occupied housing.

The Commission has proposed careful mechanisms to enable older people and their relatives to stay in their homes and paying the bond while providing for the asset to be available to meet their accommodation and care costs where necessary; the bonds minus expenses would be repaid but there would be less in the form of tax-free inheritances .

As I have argued elsewhere, the alternatives are for all taxpayers to pay for aged care or for older people to be denied access to quality care and accommodation.   A recent reader poll (SMH August 13-14, News Review, p4) reported that 60% supported partial government funding for age care (with copayment) and 27% for user pays (including a safety net for the poor).

The times for fundamental aged care reform are right politically and with good policy Australia can afford quality health and aged care into the future.

The Government has an outstanding opportunity to break free from its recent malaise and make a heartening return by Labor, the Greens, and the Independents to the compassionate mainstream that was the hallmark of the Hawke and Keating (and Brian Howe) eras.

From the mid 1980s through the mid 1990s, and perhaps again now, progressive policy could be afforded in times of financial stringency through better policy design, effective means testing and shared public and private funding.

Tony Abbott, who was a capable and progressive health minister in the Howard Government, could well recognise the intrinsic value of these recommendations, as well as the value the electorate will place on constructive bipartisanship.  Aged care and ageing issues will be of growing significance for whoever forms the next Government.


Previous Croakey posts on the report

Culturally appropriate care matters

Pressure for aged care reform will continue


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