Taskforce recommendations flag areas of importance, Govt remains quiet on commitment

After months of anticipation, the Aged Care Taskforce has released its final report and recommendations. It includes expected recommendations such as wealthier older people contributing more to the cost of their aged care services plus more surprising calls, including abolishing refundable accommodation deposits (RADs). 

Key points

• The Aged Care Taskforce handed its final report to Government in December following months of meetings and discussions with aged care industry experts
• Wealthier Australians paying more for their aged care services has been floated as a likely recommendation since late 2023; there were concerns this would be paired with an aged care levy – the Taskforce dismissed this idea
• To modernise accommodation funding and improve viability the Taskforce also called for an end to RADs by 2035 with a rental-only model preferred, plus improved accommodation funding and incentives to meet accommodation design principles 
• Recommendations to support thin markets, encourage innovation and increase transparency and consumer planning for aged care were also highlighted

Changing demographics drive funding reform

Australia’s population is getting older. That’s not a new fact. Nor is the compounding effect of a smaller working-age population to support them. The Taskforce’s final report also highlights that there will be an increased taxation burden for funding aged care services and substantial rising costs of delivering aged care. Both the Government and taxpayers will be affected here.

The general public has escaped an aged care levy of 1% of their taxable income, though, with the Taskforce rejecting past recommendations from the Royal Commission into Aged Care Quality and Safety. The Taskforce said the Government should focus on care costs and supporting the delivery of care in thin markets.

Therefore, it is marquee Recommendation 3 that calls for wealthier people to contribute more to their aged care services, with a focus on accommodation and everyday living costs.

Pat Sparrow, COTA Australia Chief Executive Officer (CEO) and Taskforce member, said the recommendation is one of many that will improve quality, fairness and transparency for how older people are asked to pay for their aged care services. 

“We strongly believe that any co-contributions need to be fair, equitable and transparent, to provide a sustainable aged care system that supports all older Australians, including those who do not have the same wealth as other older people. We will continue to argue that there must be strong protections in place for older people and that we need to ensure money is being spent where and how it is intended to be spent,” Ms Sparrow said.

Aged care providers have welcomed the official recommendation for increased personal co-contributions, including Catholic Health Australia CEO Jason Kara.

Mr Kara said aged care service providers will need additional funding to upgrade existing facilities and invest in new places to deliver services to a growing number of consumers. He would also like to see impactful recommendations introduced sooner than later. 

“With most aged care providers running at a loss, these sensible and responsible reforms are urgently needed so they can continue to invest and provide quality care for all Australians – whether they be in a city, regional town or remote community,” Mr Kara said.

“The fairest way to deliver extra funding is to ask people who can afford it to contribute more for their accommodation and living expenses, costs they have covered over their adult lives. Right now user contributions do not meet the cost of provision and research has shown people are willing to pay more for their aged care services.”

Extra support for ageing in place

Improvements to home care services, funding and organisation are seen as a major focal point for the Taskforce over the coming years. With a growing preference for older people to age at home, their recommendations complement the current home care reform journey.

“The current home care programs are not ready to meet the needs of a rapidly growing cohort of older people. Those who can access home care under the current system can leave significant funds unspent, while others can wait for months to access services,” the report stated.

“Prices across the programs are inconsistent and inefficient due to variable price setting arrangements. This undermines the predictability and sustainability of funding and can cause confusion when comparing packages with other participants.”

Over $2 billion in funding for Home Care Packages (HCP) was left unspent as of June 30, 2022, signifying the shortcomings of the current system. The Taskforce said Support at Home – which will be implemented from 2025 – is a chance for generational change. 

Relevant home care recommendations to ensure this change is positive include:

• Developing and publishing more clearly defined inclusions and exclusions lists (Recommendation 1)
• Better coordination between home care services and other social services, including health and housing services
• Establishing a fee-for-service model for Support at Home so participants only pay a co-contribution for services received (Recommendation 7)
• Introduce Support at Home participant co-contributions that vary based on the type of service accessed (Recommendation 8)

An end to accommodation deposits

Recommendation 12 could arguably have the greatest impact on consumers as it would reshape the way older Australians pay for the aged care accommodation if implemented.

“Following an independent review in 2030, transition the sector by 2035 to no longer accept RADs as a form of payment for aged care accommodation and move to a rental only model, provided that the independent review finds there is improved financial sustainability, diversified and adequate sources of capital to meet future demand and residential aged care is affordable for consumer.”

While the baby boomer generation is viewed as wealthier than their predecessors, securing upfront funds to enter residential aged care continues to be a challenge for many. This has typically resulted in the sale of homes and the loss of longer-term financial security. 

A rental-only model would alleviate a considerable amount of stress, while an additional package of measures (Recommendation 15) would help promote equity between residents ensuring accommodation income is more sustainable for providers in the long term

“For too long, we have dodged the hard question of how to ensure aged care not just survives, but flourishes into the future. As providers have struggled through one challenge after another, from bushfires to COVID-19, whilst often losing millions of dollars per year, it has become crystal clear that we no longer have the luxury of kicking this issue into the long grass,” Tom Symondson, ACCPA CEO and Taskforce member, said.

“The unavoidable truth is that aged care needs far greater investment to deliver the services the Royal Commission challenged us to provide, and that community expects. […] Older Australians are demanding and deserve higher levels of care and we need to be able to provide it for them.”

More work required

While there were hopes the recommendations would feature specific details on how they could be achieved, the Taskforce acknowledged the “high level nature” of some recommendations was the result of limited time for detailed thinking on complex issues.

This leaves plenty of work to be done, both by the Government and aged care stakeholders. Additionally, the Taskforce touched on several “out of scope” challenges during their meetings that also require further work, including workforce attraction and retention issues. 

The full final report of the Aged Care Taskforce can be found on the Department of Health and Aged Care’s website.