Tag: aged care

Ageing Australians increase demand for aged care services

As Australians are living longer than ever before, they are likely to experience greater frailty and more complex care needs requiring more aged care services.

Following the Royal Commission into Aged Care Quality and Safety report in 2021, it advised there was a need to significantly improve the quality of both residential and home care, exacerbated by chronic workforce shortages leading to substandard care. In 2023 the Aged Care Taskforce (the Taskforce) was established to advise on funding arrangements, including:

  • a fair and equitable approach to assessing the means of older people;
  • participant contributions for home care;
  • reforms to arrangements for funding of hotel and accommodation costs in residential aged care, including the phasing out of Refundable Accommodation Deposits (RADs);
  • services for inclusion and exclusion in the new home aged care program;
  • funding and contribution approaches to support innovation in the delivery of care.

Issues affecting the aged care sector

The Taskforce identified the following issues affecting the aged care sector:

  • demographic change means demand for aged care services will continue to grow;
  • current and future generations of aged care participants have high expectations of what quality aged care looks like;
  • generally older people are wealthier than previous generations and the taxpayer base is declining as a proportion of the population.

Demographic changes
The size of the population aged 65 and over is growing faster than the working age population. Over the next 40 years, the number of people over 80 years of age is expected to triple to more than 3.5 million. These demographic shifts have two critical implications:
• the taxation burden for funding aged care services grows for a segment of the population that is becoming proportionally smaller;
• gaps in the aged care workforce increase, creating significant ongoing challenges to delivering quality care.

Additional funding is needed to meet future demand and deliver quality improvements, but structural issues mean the sector’s financial viability is poor.

Superannuation shortfall
Income from superannuation should be drawn down in retirement to cover health, lifestyle, other living expenses and aged care costs. Superannuation, combined with high asset wealth through the family home and other investments, mean more people have accumulated wealth and income streams when they need to access aged care services. 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.

It is important to note that, while the asset wealth of many older people has increased, there will be a group of people with less means. Even with the maturing superannuation system, over half of older people will continue to receive some Age Pension either at retirement or as they draw down on their superannuation. Past workforce participation rates also mean women are more likely to have less means in retirement, as are those who do not own their home.

Increase in demand for home care services
It is estimated that there will be almost 2 million older people using home care by 2042, compared with around 1 million currently. Consequently, the demand for home care has been rising sharply and is projected to continue growing well into the future. As a result, government spending on aged care as a proportion of gross domestic product (GDP) is projected to grow from 1.1% in 2021–22 to 2.5% in 2062–63.
More broadly, society is demanding higher quality aged care services for all, including participants supported by government. For example, research on public understanding and perception of co-contributions in aged care showed people are willing to pay more for home care services that are essential and increase quality of life and dignity.
Additional funding is needed to meet future demand and deliver quality improvements, but structural issues mean the sector’s financial viability is poor.

Aged care funding principles
Principle 1: The aged care system should support older people to live at home for as long as they wish and can do so safely.
Principle 2: Aged care funding should be equitable, easy to understand and sustainable.
Principle 3: Government is and will continue to be the major funder of aged care. Government funding should be focused on care costs as well as delivering services in thin markets. Personal co-contributions should be focused on accommodation and everyday living costs with a sufficient safety net.
Principle 4: The residential sector should have access to sufficient capital to develop and upgrade accommodation, including in rural and remote areas and First Nations communities.
Principle 5: Aged care funding should be sufficient to deliver person-centred, quality care by a skilled workforce.
Principle 6: Aged care funding should support innovation to improve aged care services and their relationship with the health and hospital systems.
Principle 7: There should be transparency and accountability for how aged care funding is received and spent while minimising regulatory burden.


Proposed changes

Home care funding
The new Support at Home Program will be implemented in 2 stages, replacing the current Home Care Packages Program from 1 July 2025 and then rolling in the Commonwealth Home Support Programme from no sooner than 1 July 2027.

Capital funding
Over the next decade to 2030, additional investment of approximately $5.5 billion would be required to refurbish and upgrade existing aged care rooms, increasing to $19 billion by 2050.7 Current funding arrangements will not deliver the required amount of capital funding.

Funding arrangements – reforming co-contributions
While the Taskforce supports government maintaining its central role in funding aged care, it does not support a specific increase to tax rates to fund future rises to aged care funding. There are substantial intergenerational equity issues in asking the working age population, which is becoming proportionally smaller to pay for these services. Moreover, superannuation has been designed to support people to grow their wealth and fund the costs associated with retirement including aged care.

There is a strong case to increase participant co‑contributions for those with the means to contribute, noting that there will always be a group of participants who need more government support.

Reforming co-contributions would also provide an opportunity to create a simpler and fairer system by addressing current inequities. The Taskforce suggests the Age Pension status of the participant, with some additional tiers for part-pensioners and non-pensioners, would be a fair and simple way to determine participant co-contributions for aged care services.

Phasing out Refundable Accommodation Deposits (RAD)
The Royal Commission (Commissioner Briggs) recommended phasing out of RADs over time and replacing them with income through a ‘rental model’, where everyone pays with non-refundable periodic payments, from July 2025.

The Royal Commission identified several issues with the RAD system that led to this recommendation:
• RADs and DAPs are not economically equivalent, which creates incentives for providers and older people to prefer one over the other.
• Use of RADs creates liquidity risks for providers, as the RAD must be refunded within 14 days of the resident leaving care. There is no guarantee the resident will be replaced by another RAD payer and, with falling occupancy rates, there is a risk they will not be replaced at all.
• The presence of RADs distorts access to finance towards providers better able to attract RADs.
• RADs are not a reliable capital financing mechanism for particular segments, such as providers in rural and remote areas.
Paying more towards accommodation will improve sustainability. This will attract increased investment into the sector to upgrade existing homes and build new homes with high quality, modern facilities.

Protections for low-income residents
Older people with limited means need to be protected. While the residential care proposals outlined above would improve the viability of the sector through improved co-contributions, they may make it more attractive for providers to seek out prospective non-supported residents in favour of government-supported residents.

For more details, see chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.health.gov.au/sites/default/files/2024-03/final-report-of-the-aged-care-taskforce_0.pdf

Retirement village exit rules changed

New legislation means that NSW retirement village contracts will now include a timeframe that ensures timely payments for a former resident’s exit entitlements.

These changes apply only to registered interest holders with a long-term registered lease that gives them at least 50% of any capital gain.

They do not apply to:
• registered interest holders who own a lot in a strata or community scheme village or own shares in a company title or trust village that gives them their resident right; or
• unregistered interest holders.

New retirement village laws started in January 2021. The changes reflect complaints made about how exit entitlements were previously managed and provide a timeframe for former residents to receive their exit entitlements. Summarised, the changes:
• enable residents to receive exit entitlement money before their unit sells (if the sale has been ‘unreasonably delayed’);
• provide an option for residents to fund their move into aged care by accessing part of their estimated exit entitlement money;
• ensure residents no longer have to pay ongoing charges for general services for more than 42 days after they leave the retirement village (commences on 1 July 2021 onwards).

New legislation has been introduced which affects existing and all new retirement village contracts. Previously registered interest holders had to wait until a new resident either moved into or leased their old unit before they were able to receive their share of the sale proceeds (the “exit entitlements”). This could mean that if the village operator delayed the sale of a unit after the resident left, the former might not receive their exit entitlements for anywhere between two and five years.

Under the new legislation, a registered interest holder can apply to the Secretary of the Department of Finance, Services and Innovation for an exit entitlement order directing the village operator to pay the exit entitlements to the former resident even though the unit has not sold. The order can require payment after six months for Sydney metropolitan, Wollongong and Blue Mountains residences and within one year anywhere else in NSW. This order will only be made if the village operator has “unreasonably delayed” the sale considering the time taken to refurbish the unit and whether the operator as selling agent has performed all their duties within reasonable time.

Such an application can only be made by a former resident but not their estate. If the order is made, the exit entitlement must be paid with 30 days of the order.

If the registered interest holder moves out of the retirement village into a residential aged care facility and has not received their exit entitlement, the resident may ask that the operator make one or more daily accommodation payments to the facility on behalf of the resident within 28 days of the resident’s request. As more than 60% of residents move directly into aged care, their move can be delayed if they do not have access to funds to pay the daily accommodation payments to the facility and the unit does not sell quickly. These amendments are intended to make the transfer easier for residents and family members.

For more detail, see Fair Trading website, https://www.fairtrading.nsw.gov.au/about-fair-trading/legislation-and-publications/changes-to-legislation/changes-to-retirement-village-laws

Community attitudes to aged care explored

Following In-depth interviews and focus groups, the Royal Commission into Aged Care Quality and Safety has released a report, They look after you, you look after them: Community attitudes to ageing and aged care .

The researchers interviewed a range of focus groups to identify current community attitudes to ageing; community understanding of the aged care system and how individuals were planning for their own older age. Interviews were conducted with both younger and older people, diverse economic groups, Indigenous and culturally diverse groups and younger people with disabilities who already resided in aged care facilities.

Written before the pandemic, the report explores how people view entering an aged care facility, what their expectations were and most relevantly, what were the experiences of actual residents.

Post-Covid, the relatively negative comments of most interviewees about their fear of entering the aged care system, seems justified in light of the relatively high number of deaths in care facilities which appear to reflect the inadequate training and equipment available to care for older people.

The report found that as people became older, they were better informed about the complexities of the aged care system but they remained concerned about the cost and quality of care provided. There was a widespread, strong preference across the different age groups and communities to remain living independently as they age and making use of support to do so.

Most interviewees were critical of aged care facilities and saw them as being run as businesses that prioritised profit over high quality care. The prevalence of religiously affiliated organisations running facilities was seen as effectively limiting their choices, as they did not want to spend their older years living in an institution run by a religious body.

Most people described aged care facilities negatively, saying they were depressing, bleak places that felt clinical and sometimes were overcrowded. Moving to aged care was seen as ‘the beginning of the end’ that precipitated a rapid decline in one’s life expectancy and quality of life.

Specific negative factors mentioned included a lack of meaningful mental stimulation, social isolation and loneliness, poor quality personal care, insufficient staffing levels and staff training, and poor quality nutrition. These factors were interrelated with overstretched staff rushing residents through meals and personal care.

While some interviewees mentioned pleasant high end facilities, others mentioned budget facilities that provided a small per resident food budget, or residents being heavily sedated to reduce staff workload. The effect of having to provide a bond to ensure a place in a facility and the ongoing cost was of great concern to most as was the inadequate regulatory system.

Younger people with physical or mental disabilities living in aged care facilities were particularly critical of the care they received, mentioning issues of cleanliness, personal hygiene, stimulation and respect for residents and appropriate social engagement.

This qualitative research included 274 people from the general community and targeted diversity groups. It was conducted primarily to understand the perspectives of these diversity groups and to complement a national survey for the Royal Commission that has been charged with considering the design of Australia’s future aged care system.