Aged Care Act co-payments risk trapping pensioners in a cycle of poverty

Despite the Albanese government’s enthusiastic framing of the Aged Care Act as a transformative “rights-based, person-centred” reform, experts, economists and aged care leaders all have the same predictions. The Act, which addresses 58 of the Royal Commission’s 148 recommendations, risks entrenching a cycle of poverty for seniors striving to age at home.

At the centre of these concerns is the co-payment structure, which Inspector-General of Aged Care Natalie Siegel-Brown warns could push low-income pensioners into financial distress and premature residential care, ultimately costing taxpayers more while eroding dignity.

In a recent SBS radio interview, Siegel-Brown critiqued the Act’s co-payment model, which requires even full pensioners to contribute to non-clinical care. “Showering, if a full pensioner needs support with showering, they will have to contribute 5% of the cost,” she said. “If they want a shower each day, which most of us see as a straightforward part of our dignity, they will have to ensure that they have the money to contribute to that 5%.”

Cleaning, essential for health needs such as managing colostomy bags, attracts a 17.5% contribution. These costs, she noted, “can really mount up and mean that people are forsaking some of the essentials like heating or cooling, or food, or even opportunities to go out into the community,” trapping pensioners in a cycle of poverty where basic needs compete with care.

Notably, this co-payment model was not a Royal Commission recommendation but a later taskforce addition, a move Siegel-Brown questions: “I am not drawing the concept [of co-payments] into question, but I am drawing the implementation and the way it’s been structured into question.” For pensioners on fixed incomes, these contributions create a cumulative burden, particularly for marginalised groups such as First Nations elders and culturally diverse communities.

Mainstreaming Aboriginal and Torres Strait Islander care, against the Royal Commission’s advice, imposes higher co-payments for culturally vital services, which “attracts the highest co-payment even for full pensioners,” risking cultural alienation and deepening the cycle of poverty.

The government’s oversight in modelling downstream costs reveals a short-sighted approach. By forcing seniors to forgo care, the Act may accelerate their entry into residential facilities, a far more costly option. “That actually might push people earlier into residential care, which costs the taxpayer more,” Siegel-Brown warned, highlighting a false economy that could inflate budgets while isolating seniors, worsening physical and cognitive decline.

“If we look at the scientific evidence… investing in things that keep people integrated into their community… we can actually prevent a lot of physical and cognitive decline,” she argued. Yet, the Act prioritises provider compliance over preventive measures such as nutrition or dental care, the latter of which she noted is critical: “If we invested in [the recommended dental] scheme, we know how much people’s oral health is actually connected to dementia symptoms.”

The human toll is profound. Imagine a First Nations elder, perhaps a Stolen Generation survivor, skipping showers or community engagement because co-payments strain their pension, entrenching a cycle of poverty. Or a culturally diverse senior, cut off from culturally significant food or activities, which Siegel-Brown emphasised are essential for “reflecting culture and feelings of belonging.”

Her concern transcends economics: “My chief concern, perhaps more than the economics… is the human rights costs that is forfeited in all of that.” The Act’s “rights-based” promise lacks enforcement, as “there are no solid enforcement mechanisms within the Act for the entrenchment of those human rights,” leaving vulnerable seniors reliant on a complaints system ill-suited for those with cognitive decline.

Neglect of preventive investments further entrenches this cycle. Nutrition, vital for falls prevention, lacks robust regulation, while the recommended dental scheme remains underfunded. For First Nations elders, mainstreaming care is “highly culturally unsafe and inappropriate,” Siegel-Brown stressed, advocating for separately funded, co-designed services. Without mandatory cultural safety training, discriminatory care risks persist, particularly for diverse communities.

Siegel-Brown urged rethinking co-payments for pensioners: “We need to revisit the fact that anybody on any form of pension… makes any contributions at all to their care.” Covering these costs, she argued, is cheaper than residential care, while upstream investments in dental care, nutrition and community engagement could break the cycle of poverty and save billions.

Without urgent changes, the Act risks becoming a hollow promise, driving seniors into institutionalisation and deepening poverty under the guise of reform.