The cruel logic of aged care reform: when seniors can’t pay, providers can’t survive

The elephant in the room must be foremost acknowledged. When it comes to the rules and structure of how the Support at Home is basically meant to work for all Australians, it has been advocates and not government sources, that have done the laborious and intricate work of trying to untangle how the scheme will inherently function. And importantly, how it will affect vulnerable seniors. Peter Willcocks is a retired business professional and self-funded retiree but has found that with the government’s upcoming Support at Home scheme he is as busy as ever parsing through vague government notices, fronting committees and crunching numbers to show the bleak and potentially irrevocably damaging impact the current structure of Support at Home may have on clients, companies and country. Providers must be alert, if seniors aren’t able to afford Support at Home co-payments, the knock-on effect to providers could be deeply damaging too.

Design flaw

At its heart, Willcocks has calculated that the pricing model of co-payments has led to a scheme by which, “the more you need, the more you pay, yet your ability to pay becomes less with each and every service.”

Willcocks’ advocacy has been sustained, reasoned and accepted by many members of parliament. In the recent report chaired by Senator Allman-Payme, his work is noted, “an advocate highlighted that the more services a user accesses, the more they pay”, drawing attention to the rigid resource ceiling for many seniors of low means. 

“However, their income, which they must use to fund their co-payments, remains the same. Mr Willcocks describes this as a system of ‘financial elder abuse’”.

Stark calculations

Core to his advocacy has been his commitment to highlighting the issues with the incoming pricing models through extensive calculations and excel spreadsheets that would make most provider executives’ head spin. In presenting to government the reasons for the “mess” that the Support at Home scheme is set to invoke, Willcocks asserts it is paramount to have grounded data.

Creating a comparative set of figures for full pensioners, part-pensioners, those grandfathered and transferred Home Care Package seniors, and self-funded retirees with no health care card, the numbers begin to be bleakly evident.

Willcocks shares that the independent contribution rates he used were sourced from the Department of Aged Care Case studies, and the service prices were the medium price from the Summary of indicative price survey as conducted by the Department of Health and Aged Care. Yet even in this, as a citizen advocate, Willcocks has come across concerns about even the ability to predict costs for a highly educated business professional sharing that, “I have received advice that the medium prices that I have used are understated and that prices will vary with some providers charging considerably more due to their costs of supply.”

Willcocks notes that due to industry feedback when using government service medium prices estimations, the situation may be far worse than what he has analysed.

The hour of services and service types he calculated is to the “maximum number of hours available for this mix of hours for a Support at Home Classification 7,8 and HCP Lv8 ‘grandfathered’ (No worse off principle) for transition Home care packages to Support at Home.”

Full pensioner

With a $35,000 total income, inclusive of $29,874 full pension, under the upcoming scheme the independent contribution percentage would be around 5 per cent. The everyday living contribution percentage would be 17.5 per cent. With a total cost of services totalling around an estimated $1,336.50, this would mean a weekly co-payment of $122.53. With a senior in this position living off of a weekly income of $673.08 this puts co-payment amounts at a staggering 22% of pension percentage, and 19% if the government expects seniors to slowly decrement their $5,000 in savings.

For around 13.25 hours of help a week, a senior on a full pension could be looking at paying around 20% of their weekly income to have a shower and have help taking their medication, or even having support when going to the doctor to prevent health concerns worsening and needing hospital admission.

With the current cap on co-payments set out in the scheme as being $130,000, it would be projected to take 1,060 weeks or 20 years to reach the cap while, as advocates say, “choosing between a shower or meal or rent”, could be a protracted state of humiliation. 

Self-funded retiree

It is critical to re-frame the view of self-funded retirees away from, as Willcocks describes, “rich, greedy boomers”.

For a self-funded retiree on $66,000, less than what many entry level finance professionals are able to wield at 21 years of age, the independent contribution percentage reaches 50%. The everyday living contribution percentage reaches 80%, at the service weekly cost of $1,336.50, the weekly co-payment amount reaches $774.00. Of a total weekly income of $1,269.23, the “ludicrous” amount that self-funded retirees will have to pay to receive the level 7 or 8 services they have been approved for is 62% of their income.

It is understandable when Willcocks sees the upcoming pricing model as a “complete and dangerous mess”. He highlights that people, “will simply start to go without the services they need.” This could have damaging implications not just for seniors but for providers who, as the Support at Home pricing structure impacts greater numbers, see their services used with diminishing frequency.

Grandfathered transition Home Care Package

Under the soon to be replaced HCP scheme, a pensioner receiving the former pension amount of $25,260, being able to have around $15,000 in liquid cash, for a total income of $40,000, will have a 2.5% independent contribution percentage and everyday living contribution of the same. With the same estimated weekly cost of services, $1,336.5, the weekly co-payment comes out at a profoundly telling $31.58 per week. At an income of $769.23, the grand total of percentage of income, including using savings is 4%, and just utilising their pension, 7%.

The numbers are clear and startling in the reality they indicate under the new scheme.

Willcocks says, “pensioners and part pensions cannot afford to pay these amounts weekly from their available income.”

He directly speaks to the wider implications that many, including Juniper’s CEO, have been insistent on for the entirety of this year, if funding does not safeguard seniors to stay at home for as long as they can, and be as healthy as they can, the wider sector will suffer, both hospitals and aged care sectors will likely be overwhelmed, “it most likely those who can’t do without some services and require greater levels of care will be forced into fully subsided residential care as fully funded residents.”

And as evidenced by Minister Butler’s consistent messaging this month, there aren’t enough beds in the sector to receive the incoming cohort of boomers aging into the sector, and the build rate is not at needed levels. It is critical from a sector, financial and moral standpoint that all can be done to mitigate the early entry of seniors into both hospitals and aged care.

Inclusive of management fees

An issue that Willcocks also addresses is the shift in exposure to, and proximity with, management fees in SaH as opposed to the old functioning of the Home Care scheme. The new funding structure of SaH is that, “management fees are included in the Support at Home service price as opposed to separate funding for each level for Home Care Package management.”

And when it comes to the funding to cover these costs, these have been reduced, “Case Management has been reduced from 20% of total funding to 10% .”

Particularly influencing the inability of seniors to predict and manage their weekly costs is the way in which the government is approaching the scheme’s pricing, including the setting of management rates in service prices. 

“The department has advised that subsidy rates for prices will be available in July 2026 and until then providers are guided to set competitive rates.”

It may well be for seniors where money is tight, fluctuating management fees in service price could likely compound the inability to access services in a stable and routine manner.

Not about “rich, greedy boomers”

Speaking recently to a coalition of senators facilitating the report on the growing concerns with the Support at Home scheme, Willcocks spoke plainly about multiple misconceptions from government and the wider public, “the government assumes a massive take of money from participants, but the money simply isn’t there. The people who are being affected most are not, as the government says, rich, greedy boomers; they are people who are in very sketchy, precarious circumstances.”

“As it happens, the genuinely rich, the people with millions of dollars, will be fine. It’s relatively benign for them. The lifetime cap is not too bad when you’ve got, say, $3 million. But, for ordinary people, it’s massive. It basically takes all they have.”

Fellow advocate in the academic space is Kathy Eagar who fronted the committee, sharing, “A lifetime cap is really ridiculous when you’re trying to survive week by week at home on a pension. You need that relief this week to pay the grocery bill, not in a few years when you hit the cap.”

Anne Hooper submitted to the committee a complementary view, saying that the lifetime cap of $130,000 in fee contributions under the SAH Program could be seen as ‘an automated safety ceiling for the wealthy’.

System repercussions

A fellow advocate shared with Willcocks what many industry leaders have been articulating, if the government does not safeguard vulnerable seniors to stay at home for as long as they can, and be as healthy as they can, the crisis of hospital beds being ‘taken up’ and emergency departments overwhelmed will only become worse. Particularly in light of the impediments the aged care sector has transparently articulated to the commonwealth about the difficult environment hampering bed builds, the government must do all in its power to minimise the need for RAC beds, and a sector overwhelmed as well.

“By not enabling older people to stay at home longer, the new restrictive home support system will create a nation burdened by nursing homes instead of a country that respects and values its elders and their culture.” 

It is both a moral imperative to look after the nation’s seniors, and financially sustainable, for the tax-payer to keep seniors from entering hospital and RAC early. Russell Brickell of WA’s Juniper group has repeatedly called for the government to see investing in home care as an investment against looming hospital costs and crisis.

Willcocks predicts that home care providers could increasingly run into issues of the viability of their services being used, and financial cash-flow impacts, as seniors start to find ways to cover their needs outside of the established market and scheme.

“Fully Self Funded Retirees without a healthcare card will soon find that paying amounts of $656.50 and upwards for greater levels of services will soon look for other ways of accessing the care that they require.”

For those that are without family and friendship support may worse yet find themselves in more horrifying situations that as a nation it is ethically imperative to avoid. Willcocks sees the potential that, “people unable to manage ‘the more you need the more you pay’ system are most at risk of becoming clients of Debt Collection Agencies.”

Recommendations

Willcocks implores the government to, “Amend rules under consideration by the Senate. Government must’ delete all references and calculations to Individual Contributions and replace with the language to support a continuation of the current practice of Income Tested Fees.”

While an unexpected vocation in retirement, Willcocks continues to advocate for reform with Support at Home. He will continue, along with fellow advocates and industry leaders, to work towards ensuring all Australians, regardless of wealth, are able to access sustainable life-affirming, and health-sustaining services, to benefit them as a human right, the viability and sustainability of the sector, and the nation at large.