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Issue #1543      18 April 2012

Defusing the aged care time bomb

The National Aged Care Alliance, a peak body of organisations involved in aged care, has warned that urgent action is needed to deal with the care of Australia’s older citizens. The aged care system is certainly failing, with many people unable to gain access to care services, or unable to afford an appropriate level of care. Many aged care facilities are chronically under-staffed.

Most aged people prefer to live out their final days at home. The government provides some help in this respect by funding community care services provided by church organisations or private firms. However, staying at home is usually only practical in cases where one or more family members are willing and able to provide ongoing care most of the time.

In most cases, sooner or later the person being cared for must be transferred to full-time aged care facility, i.e. either a nursing home or a hostel, run by a “service provider”.

The federal government provides aged care accommodation funding for people with minimal income or assets. However, in other high-care cases a deposit or bond is required to gain a place in the facility. The bond may be paid in full as a lump sum or a monthly fee, or as a combination of a part sum and part fee. As well, the service provider charges a government-regulated fee for basic care, plus a tax deductible fee based on income and in some cases an additional fee for extra services or facilities.

On the death or discharge of the resident the deposit is refunded, but only after subtraction of an administration charge. Interest earned on the deposit goes to the service provider, not the resident or their estate. Periodic fees have to be paid by the patient, and/or family members and supporters. In many cases the family home has to be sold in order to meet these costs.

Moreover, the provision of government assistance is limited to 113 care places for every 1000 people over 70. As Martin Laverty from Catholic Care remarked bluntly: “…if you are 114 on the list, bad luck.”

Last year the federal Productivity Commission released a report on the current situation and prospects, with regard to aged care in Australia. By 2050 the number of people over 65 will have risen from 13 to almost 25 percent of the population, and the number seeking access to home care or nursing home beds may be expected to rise in proportion.

A maze of problems

One of the biggest problems concerns the staff to patient ratio in aged care institutions. Last week newspaper columnist Adelle Horin cited the experience of an 84-year old friend who booked her dementia-affected husband into a nursing home but was shocked to find that staff were almost impossible to find when needed.

Ms Horin’s friend spoke of: “residents roaming around, looking for a way out; residents left for hours unattended and with no members of staff in sight. The place looked abandoned, as if no one was in charge.”

The number of nurses was simply inadequate to look after the patients. Afterwards Ms Horin’s friend transferred her husband to a more luxurious and expensive nursing home, only to find that the problem was exactly the same.

Ms Horin observed “There is no mandated staff-to-patient ratio in aged care facilities …” Struggles have been waged to gain compulsory staff to child ratios in childcare institutions “but in aged care, apparently, staff numbers are irrelevant. … There are caring staff … but they are run off their feet. All work for slave wages and there is high turnover.”

Reaching the “ageing well” objectives

The National Aged Care Alliance (NACA) claims that its program entitled Agewell will implement all the reforms outlined in the Productivity Commission’s report, “Blueprint for Aged Care Reform”.

Specifically, it claims that the Agewell program will enable older people and their families to gain information and be assessed for their aged care needs more easily, and will enable people to stay in their homes with community care help for longer periods. It will enable older people to retain the family home, and give families a wider choice of payment for aged care accommodation and services.

These reforms are certainly worth supporting. However, even if they are achieved (which is still under a question mark) they do not constitute fundamental reform, and many of the supporting statements raise major concerns.

For example, a massive deposit would not be required on admission, as it now is, but a fee would be charged in the form of an equity owed to the service provider. This would presumably be claimable from the patient’s estate after their death, and could still lead to loss of the family home.

The system is still based on privately-run services, dominated by the profit motive. Ian Yates, chief executive of COTA (Council of the Aging) declared: ‘In the new system the accommodation price will reflect the cost of providing it and the market in which it is offered. The price would be publicly advertised. Currently what you pay is very often determined by what assets you have rather than the actual price of the accommodation.”

That sounds very much as though the less well-off would have to pay the full market rate, with no concessions, under the reformed system.

Aged care organisations are arguing that the aged care crisis could be dealt with by a continuation of the user-pays principle to meet nursing home running costs, an increase in the current level of government subsidies for construction of new facilities, and the lifting of the current government-imposed limit on accommodation charges.

The outstretched hand

Implementing the Productivity Commission recommendations would undoubtedly require massive extra government funding, and the private sector already has its hand out for a hefty slice.

Martin Laverty from Catholic Care complained: “Current laws limit a high care resident’s accommodation charge to $32 a day. Even at the Sydney Backpackers at Central Station the daily charge is $69 per day. … an average high care bed built to contemporary standards operates at a loss of $62 each day. (This) is the reason that some providers are not building new services to meet growing demand.”

But is it? Laverty enthusiastically endorsed the bond system, which he said had facilitated the provision of services for low-care residents. What he didn’t mention is that the system has also yielded service providers with remarkably handsome returns from the interest on huge capital reserves.

NACA claims that the reforms will rectify the nursing shortage by providing decent wages for nursing staff. But will they? In a distinctly ambivalent statement, Ian Yates commented that aged care workers would be paid “fair and competitive wages”.

Laverty totally dismisses the idea of the government using special levies or taxes to provide long term funding for aged care.

He recently declared: “The taxpayer cannot fund it all - particularly in years ahead with fewer taxpayers, more people needing aged care and increased health and age pensions costs as the population ages. … German Chancellor Angela Merkel is proposing … a generational tax to be imposed on those aged 26 to 60 to fund the care needs of older Germans. A tax like this in Australia would be impossible to sell to the electorate.”

But would it? Australian taxpayers certainly resent their taxes being used for unpopular initiatives, such as never-ending wars in Afghanistan and elsewhere. However, they’re overwhelmingly in favour of the Medicare levy, whose single, stated purpose is to fund universal medical care. A similar levy to fund universal aged care would provide adequate protection against population ageing, and would undoubtedly gain widespread approval.

Moreover, there is no reason why nursing homes – or aged care complexes that provide a variety of accommodation services, as the Productivity Commission has recommended – could not be government-run. After all, governments manage public transport, hospital and other services – not to mention superannuation schemes that have outperformed private schemes, many of which suffered massive losses during the recent financial crisis.

The fundamental reason for the current crisis is that aged care is dominated by the private sector, whose values and practices have been adopted by many of the church-run organisations.

Moreover, governments have not tackled the failings of the aged care system, which include lengthy prior notification by the government to the institution concerned of accreditation inspections.

As Adelle Horin commented: “Providers might argue that the current system is failing because of lack of funds. But enriching the providers in a freed-up market is no panacea – not without more transparency, a better accreditation system, including public reporting on unannounced (inspection) visits, and better staffing”

Achieving the Productivity Commission’s objectives would certainly require extremely tight control by government over the profit-motivated firms that currently dominate the aged care industry. But it would be better still to begin to replace the current arrangements with a new Medicare-style aged care regime dedicated to providing a first class service for our older fellow-citizens. They deserve it, and so do we.  

Next article – Editorial – Undemocratic outcome under single seat system

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