The Australian Government has postponed a major piece of the reform puzzle for the home care sector, allowing service providers to continue setting their own prices for an extra year.
This delay has sparked concerns about the welfare of older Australians and the sustainability of the aged care industry. Critics also argue that these delays are politically motivated, especially with a federal election looming in 2025.
Key points
The government’s hesitation comes at a time when the home care sector is facing unprecedented challenges. Reports indicate that delays in implementing new policies could exacerbate existing issues in care delivery, particularly for those relying on home care packages.
Service providers are particularly concerned about the lack of information coming their way so they can educate and prepare staff and inform older people receiving care.
A recent webinar saw the government mention key information will be provided before Support at Home comes into effect from July 1, 2025.
Many expect information to be shared around March, if not later, leaving just a couple of months to prepare for an entire new home care system. There are major fears this lack of lead time could hinder service delivery.
With so much change on the horizon, the government has decided to stage the introduction of price caps on services in the new Support at Home program.
This delay could benefit aged care operators by ensuring they have more control over their revenue during a major period of upheaval. However, questions over the decision have been raised.
On one hand, the government’s focus on maintaining voter support might be overshadowing urgent sectoral needs. On the other hand, supporters of the government suggest that the pause allows for a more thorough review of the proposed changes to avoid any unintended negative impacts on service delivery.
Industry experts from Invox, an advisory group that supports and educates home care providers, are concerned that the government’s decision to introduce set prices is going to cause more harm than good.
This is in addition to another change that will see care management fees halved to just 10% of the total service fee.
“Set prices and fees work best for high volume sectors where the costs of providing services are similar for all. This is not the case in aged care where organisations such as those in rural areas or smaller responsive services have higher cost bases,” Invox said.
“Think of services where staff are difficult to find and are expensive to deploy or services for clients that require more individualised care. Setting a low care management fee and using markets with set prices in these situations will create what is known as ‘thin markets’ where local services cannot survive and just disappear.”
The sector already struggles with staffing shortages and funding models that do not adequately support the rising complexity of care needs.
Inbox experts Roland Naufal and Matt Hart suggested that this delay indicates the government has received suggested service prices from IHACPA and that they’re not what the government wanted before an election.
“It’s not hard to imagine the government receiving the indicative prices from IHACPA with the recommended margins being set much lower than 40% to cover the variability of costs of service provision],” they said.
“That would have led to a Christmas government announcement that highlighted just how hard it was going to be for providers to survive in the new scheme.”
The delay touches on broader issues like the financial viability of aged care providers, many of whom operate on thin margins or at a loss. The push for higher quality care without corresponding funding adjustments has left many providers struggling, which in turn impacts the care quality and availability.
Positively, there is good news for older people accessing home care services. In addition to its price cap delay announcement, the government revealed extra consumer protections to help older people avoid being taken advantage of.
This includes banning entry, exit and other hidden fees and agreed price changes where older people must agree to any pricing changes before Support at Home begins in July.
There is also a lifetime $130,000 cap on aged care services and the no worse off principle protecting many older people already receiving home care services from making co-contributions.
The aged care reform saga highlights a pressing dilemma: balancing political strategy with the immediate and long-term needs of an ageing population.
Whether this delay will lead to a more robust system or further entrench existing problems remains a critical question for Australians concerned about the care of older people.
Providers setting their own prices? What is new
They have always set their own.
With older people kept alive longer
Good business to be in