This year’s Budget has been widely regarded as fundamental to a reform of Australia’s aged care system.
A need for reform means a need for funding
The need for reform is well known in light of the Royal Commission into Aged Care Quality and Safety. The Commission’s Final Report was publicly tabled on 1 March 2021. Across some 2,500 pages and 5 volumes, the Final Report outlines the Commission’s findings on what has gone wrong with Australia’s aged care system, and details 148 recommendations to fix the system.
In the Royal Commission’s words, ‘Many of the people and institutions in the aged care sector want to deliver the best possible care to older people, but are overwhelmed, underfunded or out of their depth’. There are systemic problems of a serious, recurrent, and interconnected nature, relating to a large extent (though by no means exclusively) to funding issues.
It has been found that the Government failed to fund the aged care system at a level sufficient to provide uniformly consistent high quality and safe aged care. This is so notwithstanding that of a total expenditure on aged care in Australia in 2019-20 of about $26 billion, the Australian Government spent $21 billion. Only the remainder was paid by consumers.
The Royal Commission’s recommendations are geared towards what the Commission envisaged would be an entirely new aged care system. And it is clear that to achieve this requires money.
Amongst the Commission’s key funding recommendations is a concern with understanding the costs of providing safe and high-quality care, and ensuring that subsidies and user contributions remain in line with service costs.
In fact, every recommendation for fundamental reform would come at a financial cost. For example, it is estimated that more than 130,000 additional workers (more than a 70% increase on current baseline numbers) would be needed to implement the Commission’s recommendations. Additional workers obviously translate to additional cost – particularly so, if there is to go a general upskilling across the sector.
In the lead up to the Budget, every stakeholder group and interested party had their own predictions and aspirations – many conscious of the much-publicised fact that a report by the Grattan Institute has found an additional $7b a year would be required to implement the Royal Commission’s recommendations. In terms of what might be considered a holistic statement of sector’s hopes and priorities, most would be aware that the major aged-care provider peak bodies have combined as the ‘Australian Aged Care Collaboration’ to call on the Government to act quickly and adopt 15 priority areas from the Final Report, covering: human rights, access and choice; workforce; transparency; and sustainability.
The Budget revealed
With the release of the Budget comes the announcement of investment in a $17.7 billion aged care reform package, focused around 5 pillars:
- Home care – supporting senior Australians who choose to remain in their own home
- Residential aged care services and sustainability – improving and simplifying residential aged care services and access
- Residential aged care quality and safety – improving residential aged care quality and safety
- Workforce – supporting and growing a better skilled care workforce
- Governance – new legislation and stronger governance.
The reforms will be rolled out over 5 years. In summary, we will see:
- Immediate boosts to home care, with the release of 40,000 more home care packages in 2021, and a further 40,000 packages in 2022.
- A basic daily fee supplement for residential care, of $10 per resident per day.
- A mandated minimum of 200 care minutes per day (including 40 minutes with a registered nurse) per resident in residential care facilities. A registered nurse will also need to be on side at residential care facilities for a minimum of 16 hours per day.
- Enhanced regulatory and monitoring powers of the Aged Care Quality and Safety Commission, and additional funding for the
- An upskilled workforce (through additional training, and a single assessment model – first in residential care and later in home care) and a larger workforce.
- A National Aged Care Advisory Council, and a Council of Elders, and establishment of an office of the Inspector-General of Aged Care.
- A new Aged Care Act by mid-2023. In contrast to the existing Act – which is largely concerned with governing funding arrangements – the new Act is expected to focus on person-centred care, governance and quality.
- Revised Quality Standards.
- Discontinuation of the Aged Care Approvals Round process from 1 July 2024.
- Funding for expansion of the existing independent Hospital Pricing Authority to become the Hospital and Aged Care Pricing Authority – to ensure that aged care funding is directly related to the cost of care.
- An interest-free loan program to help providers with limited liquidity to meet their RAD refund obligations.
- A new star rating system for quality, safety and performance, on My Aged Care.
Comment
It appears that the Government has accepted most of the Royal Commission’s 148 recommendations. Early reports suggest the sector and peak bodies are relatively satisfied. There are, however, some notable recommendations which the Government has not accepted.
In particular, the Commission recommended a new aged care program combining the existing Commonwealth Home Support Programme, Home Care Packages Program, and Residential Aged Care Program (including Respite Care and Short-Term Restorative Care). The new program was to deliver comprehensive care with new core features, while retaining the benefits of each of the component programs. The idea was that there would be common eligibility criteria and a single assessment process; access to one or more categories of the aged care program based on need (ie an ability to move between categories); and certainty of availability and funding based on need. In short, the Commission envisaged a single needs-based system, in which programs would not be ‘siloed’ and care would be made available to the population-based on need – rather than being ‘rationed’ or limited. This, however, has not occurred. Residential aged care and community-based care will very much continue to operate as separate programs.
Also worth noting is the governance model that will apply to the reformed aged care system. This was a key area of divergence between the Commissioners. One (Commissioner Pagone) favoured the establishment of a New Australian Aged Care Commission. Its independence (it was hoped) could have given undivided attention and focus to its task of being an effective system governor of aged care. The alternative model – and the one which the Government has determined will feature in the reformed aged care system – resembles that which already exists: The system will continue to be managed by a Government department, with Ministerial oversight.
Finally, bear in mind that although the reform package has a total value of $17.7 billion, it will not all be released at once. A large proportion (approximately $11 billion) of the package will not come online until 2023 (coinciding with the new Aged Care Act) and beyond.
Reform of the aged care system was always going to take a number of years, and could have taken a number of different directions. With the release of the Federal Budget and the Government’s response to the Royal Commission, we now have some clarity about the direction in which aged care reform is headed.
