This week, aged care reforms announced by the Gillard government two years ago came into effect – implemented by the Coalition. The revamped system is promoted as being more transparent, offering greater flexibility and control for the consumer, but already deep concerns have been expressed over its introduction.
The changes that came into force on July 1 are aimed at encouraging two modes of behaviour: the first – to encourage older people to stay in their homes longer, and the second – to ensure the user pays appropriately for the care they receive, with new formulas to work out how much they pay. New rules for care providers, aimed at raising the bar for their customers, are also part of the package.
In short, the new system removes the distinction between high and low care, offers flexibility in the way users pay for their care, and introduces a revised income and assets test – to assess how much a person will pay (for care accommodation or care in their home). This test will affect how, for instance, keeping or selling the family home will impact the homeowner’s aged-care bill.
Aged care service providers are now required to change the way they offer their services and how they price them.
Care homes will still set their own fees, but from now on they must be advertised via the Government’s My Aged Care website – www.myagedcare.gov.au. With an online calculator to work out fees and payment formulas, the website is central to the government’s apparatus for operating the new system, and it hopes, making it accessible. A section devoted to service providers includes details of their care services, right down to the standards of each type of room on offer.
New regulatory controls for care providers also apply, with any nursing home wishing to charge more than $550k as a lump sum for a bed, needing approval from the Aged Care Pricing Commissioner.
These changes have been a long time coming and both sides of politics know they are essential.
Australian politicians and economic commentators have been worrying about aged care for decades. 40 years ago the ‘lucky’ country was also a youthful country. In 1970-71, 31 per cent of Australia’s population was aged 15 or younger. That figure is now 18 per cent.
Over the same period, the proportion of the population over 65 grew from 8 to 13 per cent and the line on the graph is heading up. Over the next 40 years the proportion of the population over 65 will almost double, to 25 per cent.
For multicultural communities the trend is steeper. By 2026, the proportion of the Australian population over 65 from multicultural backgrounds is expected to increase by more than 40 per cent, and within the next 12 years, one in four Australians aged over 80 will be from culturally and linguistically diverse backgrounds.
Against this backdrop, sustaining and expanding culturally appropriate aged care provision will become vital.
Mike Zafiropoulos AM, President of Fronditha Care, which operates five aged-care residential facilities in Victoria and NSW, says gauging the impact of the changes applied this week will take time.
“We need 6 to 12 months to assess how they are going to influence our operations,” he told Neos Kosmos. “For instance, now that all eligible residents – both low and high care – are expected to pay a bond, the question is ‘how will that be accepted by prospective clients?’ “
Mr Zafiropoulos says the repercussion of the Government’s recent cost-cutting measures in relation to dementia sufferers is a concern. With the abolition last week of the Dementia and Severe Behaviours Supplement – which assisted providers care for people with dementia – Fronditha is set to lose out, and its ability to offer such care is weakened.
“It will impact our finances adversely by $530,000 per annum,” says Zafiropoulos. “The government has decided to put more emphasis on the ‘user pays’ principle, but at the same time exert greater financial pressure on providers.”
Despite this, Fronditha’s President says his organisation is committed to affordable accommodation bonds – now known as the Refundable Accommodation Deposit (RAD). Under the new system, users of care homes will either pay a lump-sum payment (the RAD), or a regular rental-type payment called a ‘daily accommodation payment’, or a combination of both.
Last week, CEO of Alzheimers Australia, Glenn Rees expressed his concerns over the trade-off between the ‘user pays’ focus, and the need to improve the quality of aged care services – particularly in relation to the care of patients with dementia.
“One would have to say the scorecard is not promising,” said Mr Rees, who is sceptical about the Government’s plans to ensure dementia can be diagnosed early.
The Department of Social Services cited a blow-out of the budgeted cost of the Dementia and Severe Behaviours Supplement program for its abolition (the program consumed its four-year allocated budget of $52 million in less than 12 months of operation), but while the Government has said a replacement scheme will be established. Rees isn’t holding his breath. “It’s not clear to me that further discussions are going to be about actually designing a program to do the job that was originally intended,” said the CEO.
Victorian MP Maria Vamvakinou, a member of the Gillard government that originated the reforms that came into force this week (the dementia program abolition was not one of them), says that while Labor set out to create “a positive and targeted policy that responded to all the needs [and] a more flexible and streamlined approach, especially in relation to cultural sensitivity,” the Abbott administration has instead “engendered fear and insecurity amongst elderly Australians.”
Labor’s Member for Calwell told Neos Kosmos that while welcoming the changes as part of the roll-out of Labor’s Living Longer, Living Better reforms – she has grave concerns over the Coalition’s approach to aged care in general.
“The Abbott government has made cuts to Labor’s historic aged care investment in its first Budget, putting progress at serious risk,” says Vamvakinou, adding that while Labor has done “the heavy lifting” the Abbott government is undermining reform.
Cuts to the $652 million payroll tax supplement and the $1.1 billion Aged Care Workforce Supplement, as well as reductions in pension entitlements (affecting service providers’ revenue streams), are all examples of the Coalition’s misguided approach, says the Victorian MP.
“Living Longer, Living Better was the culmination of years of hard work [involving] aged care stakeholders, the Productivity Commission and thousands of Australians who assisted in the development of these reforms.”
Deeply concerned over the abolition of the dementia supplement, Vamvakinou says the Government’s myopia over “the looming workforce crisis in the industry” should also be ringing alarm bells.
“Tony Abbott has been put on notice,” she says defiantly. “Labor will not stand by and allow this government to undermine our reforms.”
The changes to aged-care that came into effect this week do not necessarily affect people already in the aged care system. Anyone receiving aged-care services before July 1 may continue with their current arrangements, or they can choose to move to the new system. Those who were in an aged-care facility before July 1 but leave the system for more than 28 days are subject to the new rules.