Wealthy people should pay more for aged care to ensure those with fewer means can also access care services, a government report into the sustainability of the aged care system has found.
But the Aged Care Taskforce stopped short of recommending any new taxes or levies be introduced to increase funding to the sector.
It also ruled out any changes to means-testing rules relating to the family home for aged care funding.
The recommendations were part of the taskforce’s final report into how to ensure Australia’s aged care system can remain financially sustainable in the face of an ageing population.
The number of Australians aged 65 and over is expected to more than double, and the number aged 85 and over to more than triple, over the next 40 years.
“Australia’s aged care needs are increasing as the population ages, and expectations of quality improvements are high,” the report’s introduction reads.
“However, the aged care sector is currently not in a financial position to meet expected demand, deliver on the required quality improvements or invest to meet Australia’s future aged care needs.”
Specifically, the taskforce reported on a number of different aged care funding issues including how to fairly assess the financial means of older people and user contributions for both at-home and residential care.
The report is a part of the ongoing efforts to improve our aged care system after the findings of the 2018 Royal Commission into Aged Care Quality and Safety, which found a number of structural problems with the way in which aged care is funded.
“Australia’s aged care system is under stress,” aged care minister Anika Wells said.
“There is universal acceptance that something must change in order to ensure all Australians can age with the dignity, safety and high-quality care they deserve.
“After spending their lives building up our country, we have a solemn responsibility as a nation to respectfully care for older Australians as they age.”
Those who can should contribute
A key issue identified in the report was the fact that as the proportion of Australians aged 65 and over grows, the younger generations – and therefore the number of working taxpayers – are shrinking.
The report says it’s clear that with more people needing aged care, and fewer people working to pay for it, that older Aussies will have to fund more of their aged care needs privately, specifically a means-tested co-payment from your super.
“The superannuation system supports Australians to save for retirement,” the report reads.
“The government’s proposed objective for superannuation is ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’. Income from superannuation should be drawn down in retirement to cover health, lifestyle, other living expenses and aged care costs.
“As a result, there is more scope for older people to contribute to their aged care costs by using their accumulated wealth than in previous generations.”
However, the report did stop short of recommending people be forced to set aside part of their super for aged care costs.
But those who can’t shouldn’t miss out
While the number of older Australians with accumulated wealth is growing, the report acknowledges there will always be “a substantial number of people with limited means”, including pensioners or people who don’t own their home, and that a robust safety net is needed for these people.
The taskforce gives no specific outline for how that safety net should operate but notes: “Settings will need to ensure those who cannot make a greater contribution are not asked to do so, and rules are in place to support equitable access to high quality aged care services for all participants, regardless of their means.”
What are the experts saying?
Not-for-profit advocacy group Council on the Ageing (COTA) says its members support the idea of co-payments and a robust safety net for those without means – if the quality of care improves.
“Older people have told COTA Australia over many years that they would be prepared to pay more for aged care if the quality is improved; a clear safety net to protect those who can’t afford to pay is in place; there are strong consumer protections for all participants; and providers were accountable and transparent about where and how taxpayer funds and individual contributions are being spent,” the group said in a statement.
Similarly, Mary Delahunty, CEO of the Association of Superannuation Funds of Australia (ASFA), also supported the ‘user-pays’ recommendations and praised the non-compulsory nature of the proposed rules.
“The recommendations of the taskforce are in line with ASFA’s submission and include changes to charging and means-testing arrangements, which will ensure that those with accumulated wealth and scope to contribute to the costs of their aged care can do so,” she said in a statement.
“Importantly, the taskforce has ruled out ring fencing part of individuals’ superannuation for aged care, which is entirely appropriate – given the true objective of super.”
However the aged care system is funded, it’s clear the current arrangements are unsustainable and will not be fit for purpose in the future.
Would you be willing to use your super to contribute to your care? Is it fair that those who haven’t saved get theirs paid for? Let us know what you think in the comments section below.
Also read: What to do if your parent is refusing aged care