Mar 16, 2022

Should the richest aged care residents pay more? Experts say yes

Rich residents should pay more

Surrounding aged care groups have joined their support towards the proposal, set to be broadcast next week by chartered accountancy firm StewartBrown, a firm whose expertise lies in advice to the aged care industry.

Grant Corderoy, a senior partner at the firm, is seen as one of Australia’s leading aged care financial experts.

“At the moment, what you pay if you’re in aged care, it’s inequitable,” Mr Corderoy told The Sydney Morning Herald. 

Currently close to 240,000 Australians reside in aged care homes and are charged either a fee per day, 85% of the aged pension, or what’s called a “Refundable Accommodation Deposit” (RAD) – a lump sum usually ranging into the hundreds of thousands of dollars (different providers differ on the precise amount) when entering the facility. 

The lump sum is returned to the resident if they leave the facility or given to the resident’s family upon their death.

The system currently sees the entirety of the deposit returned either to the resident or their designated loved ones. 

“Plan B” being proposed would see providers retain a portion of the deposit in relation to the length of the resident’s stay. 

The system as it stands means those with the capacity to pay more have often been paying the least for their aged care stays.

The “Plan B” proposal, to be outlined at an aged care summit next week, would have each resident contribute a “rent” per day assessed on what their assets displayed to be affordable.

A further look at the plan, published in The Weekly Source, an aged care and retirement living magazine, described the proposed user-pays approach as “not about shaking down Granny, but paying a fair and reasonable price for a quality service in your last few years of life”.

A swift response from the Department of Health has been issued, with a spokesperson rejecting the proposal on March 14, conveying the government was in no way contemplating raising fees for residents and would not pursue an across-the-board levy in reaction to the Aged Care Royal Commission. Labor gave no comment.

Pricing was a core part of the royal commission, with it looking at how residences were paid for and recommending in turn the establishment of an independent pricing authority to “restore confidence” in what and how residents were asked to pay.

A further recommendation from the royal commission was a swift $10 rise in daily fees paid to operators per resident, a move the Morrison government has set to action as of July 1 – the government additionally vocalising support for the creation of a new pricing authority.      

Mr Corderoy argued that accommodation charges were now inequitable and talks are desperately warranted leading up to May’s federal poll, to allow whoever was to win government to be able to seriously consider a novel funding model for next year’s budget. 

The plan, while currently being ruled out by the government as it focuses on the ‘user-pays’ funding approach, has garnered support from qualified and seasoned aged care groups.

The chief executive of Aged and Community Services Australia (ACSA), Paul Sadler leads this organisation looking out for the needs and voices of not-for-profit homes, and he shared that his group supported in principle what was outlined in the “Plan B” proposal. 

“Running a campaign about user-pays in aged care in an election campaign is probably not the right time,” he commented. 

“We’re focusing on workforce issues rather than the issue of who pays because we want to support a workforce that’s been through the traumas of Omicron and the pandemic over the past two years.”

Professor Joseph Ibrahim, the head of Monash University’s Health Law and Ageing Research Unit, argued access to high-quality aged care must be a universal right to all, the underpinning notion that healthcare was built on in Australia, and not reliant on users’ wealth to assure them of an appropriate level of care.

Professor Ibrahim, experienced as an academic and aged care doctor, conveyed that the majority of companies operating aged care residences would agree “with the Liberal Party’s philosophy of a free market in aged care”. 

However, he did note the opposing government had not as of yet made its position apparent on how it would alternatively approach aged care if it was chosen to govern in May. 

He commented, “Labor hasn’t overextended itself to set up aged care as anything like healthcare.”

Ian Yates, chief executive of Council On The Ageing, said that his organisation was largely in agreement with the notion that users should pay more where they could afford to do so.

Many assess that the current system is inequitable for people on lower incomes in urban cities and for those in regional areas where real estate cannot track with the worth and increases of bigger cities.

“In some country towns, that might be almost the whole value of your house, whereas in, say, Sydney’s upper north shore, it’s the difference between the upper and lower levels of what the real estate agent thinks you’ll get for your house. There’s just no equity in that at all,” Mr Yates added. 

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