Opinion & Commentary
Same old, same old in aged care policy
The federal government’s aged care package - $158 million to fund 2000 ‘transition beds’ over five years, and $300 million in interest free loans to fund 2500 additional aged care places - is a short-term policy response, which may well achieve its objectives, but without adequately addressing the long-term challenges posed by the ageing of the population.
That said, so grave are the problems in many public hospital emergency departments that necessity virtually compelled the federal government to seize upon any initiative which will free up acute-care hospital beds currently occupied by elderly patients awaiting placement in nursing homes.
To this extent, the Rudd Government has made good its pledge to ‘end the blame game’ with the State governments over public hospitals by boosting the Commonwealth’s commitment to aged care.
However, the government’s package represents the same old, same old in aged care policy.
The challenges facing the aged care sector are well-known. Increasing numbers of people are living beyond 75 plus years of age, and are requiring intensive hospital and residential care. As the baby boomers age, demand for residential aged care services will skyrocket.
How to pay for the necessary expansion in aged care capacity is the issue the former federal government wrestled with unsuccessfully for over decade, ever since its ill-fated attempt to extend the accommodation bond system provoked unjustifiable outrage in 1997.
Accommodation bonds are financed by the sale of the homes of residents in aged care facilities, and are returned to their estate upon death, minus an administration charge. Bonds can currently be levied by aged care providers for places in “low-care” facilities. Allowing providers to request that recipients of “high care” pay a bond to offset the public cost of their care would encourage investment and provide the aged-care sector with much needed capital with which to create extra places.
The family home has a special significance. But if a spouse no longer resides there, it represents an asset no longer required for accommodation purposes by those in ‘high care’. Caring for aged parents was once a family responsibility which has progressively become a public responsibility. The present arrangements – the discrimination between “low” and “high” care - unfairly benefits those members of the community whose parent is frail enough to require ‘high care’. They alone are allowed to retain complete control over their inheritance, while shifting the cost of caring for their parents on to taxpayers.
The price the general public pays for preserving this privilege is an inadequate aged-care system and an overburdened public hospital system. Unfortunately, neither side of politics is willing to make the sensible decision to remove the anomaly for fear of inciting an electoral backlash.
The 2004 Hogan review of aged care policy found that extending the bond system was a fair, efficient, and sustainable solution. However, the Howard government had learnt the tough political lesson of 1997, and did not dare to reopen the issue.
Instead, in early 2007 the government committed $400 million to create 7000 additional ‘home care’ places. Nursing home accommodation fees were also increased, with the government agreeing to meet most of the rise from increased taxpayer-funded subsidies. The Rudd Government’s package essentially adopts the same approach.
Interest free loans are just another form of tax-payer subsidy, which will draw the aged care sector more firmly into the thrall of government. The Hogan report concluded that the centralised licensing system (which limits the number of aged-care beds) already sucks the dynamism out of a sector unable to response creatively to market signals. Hogan also found that the uncertainty created by the inability to levy bonds stymied long-term planning decisions. Making aged–care providers even more dependent upon government funding to meet capital costs (and therefore subject to the whims of future policy-making) will surely worsen these problems.
As worrying is the Rudd government’s willingness to increase ageing-related calls on the public purse when younger generations of taxpayers already face a rising tax burden to pay for the health care and pensions of the elderly. Given the ageing of the population, it is depressingly obvious that governments of all persuasions would prefer to tax younger people rather than risk antagonising the elderly or near-elderly (and their families) due to the increasing size and political influence of this constituency.
A reforming government, interested in outcomes rather perceptions, should have seized the opportunity to eliminate the absurd inequities of the accommodation bond system as a major step towards a fair, efficient, and sustainable aged care sector.
Dr Jeremy Sammut is a research fellow at The Centre for Independent Studies.
