Should wealthier older Australians pay more for aged care services?

The financial sustainability of the aged care sector has been in question for years, and according to some industry experts, more consumer contribution to aged care services from those who can afford it is the key to get out of this struggle. 

The latest StewartBrown Aged Care Financial Performance Survey Sector Report found that about 70% of aged providers are operating at a loss despite 65% of those clients having significant assets. 

StewartBrown Senior Partner, Grant Corderoy, said a user pays proposal would help prevent providers operating as such a huge loss. 

“This reform needs to happen to allow providers to charge more to the consumers that have the ability to pay,” Mr Corderoy said.

“The financial position won’t improve until we get more funding.”

About 65% of older people in aged care have significant assets and in the new proposal, those clients would be reassessed and be made to fully pay for accommodation and extra hotel-like services such as cleaning. 

Currently, all clients contribute to their Basic Daily Fee, but those who have or receive more than $55,000 in assets and income annually are asked asked to pay a fee towards accommodation and extra services which varies depending on the accommodation type and features of the home.

So is it fair to charge those with more assets and income more for these services? And will this new proposal come with a cost?

Hello Leaders asked some experts in the sector to get their say. 

Inadequate asset testing

The proposal for wealthier older people to pay more for some residential aged care accommodation and the hotel-like services is backed by industry professionals, but agree the income and means assessment criteria needs to be reformed.

Aged care consultant and former Chief Executive Officer (CEO) of both industry and provider organisations, Paul Sadler, said there were some failings in the current income and means assessment criteria which were outlined by the Aged Care Quality and Safety Commission.

“The Royal Commission had a look at the assets and means testing and there are some inequities in how they work in aged care,” he explained.

“There’s some areas where the fee charging regime is not operating properly.”

“The implication of that is the people that should be paying towards their care are currently not doing so.”

Patricia Sparrow, Chief Executive for the Council on the Ageing (COTA), agreed that the current assessment criteria needed some refining to become fairer and more nuanced to assess clients’ wealth.

“The asset test treats the primary residence the same whether you have a mansion in a high-income area or a modest family home in a lower-income area,” Ms Sparrow said.

Currently, there are some systems in place where client contribution is made by those who can afford to pay, but providers are still often relying on Government subsidies to pay for these clients’ services.

“It’s definitely fair [to charge wealthier older people for these services]. The contrast is fair for the Government to subsidise care delivery in aged care and to support those who are less well-off with their housing costs,” Mr Sadler said.

Ensuring fairness and transparency in the system 

Asking wealthier people to pay more for these aged care services has been outlined as a viable financial option to help improve the financial state of the sector, but concerns around fairness and transparency have arisen around the proposal. 

Ms Sparrow said that COTA has long advocated for wealthier clients to pay more, but that the quality and level of care they receive needs to improve in order to implement this proposal.

The system would also need to ensure every client is receiving the same level of care and accessibility to services regardless of how much they may be contributing to them.

“Older Australians with the financial means to pay more for aged care should do so, but the quality of the care provided and the ability of older people to use the services they are paying for must be improved,” said Ms Sparrow.

“Any changes to the current payment system must avoid creating a two-tier experience in the aged care system – as this will disproportionately impact lower-income Australians and their ability to access quality care.

“The Federal Government will need to continue to subsidise care for those who can’t afford to pay ensuring there is a strong safety net.”

Mr Sadler agreed, adding that making wealthier clients pay for more services shouldn’t come at the expenses of those not as well off.

“Where you prioritise access for wealthier people, there’s always a risk that that resource constraint comes at the cost of access for less well off people,” he explained.

“We need to make sure any changes we make for wealthier people do not inadvertently make access for less well off people more difficult.”

What will it do for the sector?

The question of the financial sustainability of the aged care sector has been in the conversation for years – with recent reform sprouting from the final report of the Royal Commission into Aged Care Quality and Safety.

The proposal for wealthier older people to pay for their accommodation and hotel-like services is said to improve and amend the sector without the assistance of more Government funding.

“[Wealthier people paying more for aged care] would put it on a better financial basis,” Mr Sadler said.

The Royal Commission also recommended the daily fees paid to operators per resident be raised to $10 to help providers improve the quality of care and services offered to clients  which was introduced in 2021. 

Whether this proposal is going to be implemented across the sector is still unknown, but it could be the key to getting care and services back on track for older Australians.

Do you think this proposal would help fix the aged care sector? Why or why not? Let us know in the comments below.