How the 2013 aged care reform package is playing out

We often hear about the policy problems and challenges associated with Australia’s ageing population. But when it comes to aged care, that very same trend is unleashing exciting new opportunities to improve the way we care for older people.

A bipartisan commitment to improving consumer choice in aged care has seen the passage and implementation of significant reform to the way the sector is regulated over recent years.

These reforms have been the catalyst for transformation in the sector as it shifts from a mostly cottage industry to a competitive market with several very large private and publicly-listed providers who are continuing to acquire and build new facilities across the country.

These larger providers are joining with not-for-profit and community providers, both large and small, in contributing to the birth of an innovative new industry characterised by choice and quality for older Australians.

Yet there is concern in some quarters, most recently articulated by Ross Elliott, that people of lower means may not be accommodated in the new system, which they see as driven solely by the desire to cater to wealthier residents.

It’s easy to succumb to this doom and gloom narrative when you peruse the price list for the accommodation deposits at aged care facilities these days, which are mostly in the hundreds of thousands of dollars, some even getting close to the million dollar mark.

“How will my ageing relative, who hasn’t got much more than her weekly pension to her name, afford these costs when she needs to move into aged care?” we ask ourselves.

What this view overlooks is the fact that aged care facilities are required to meet a ratio of supported residents – those residents who don’t have the means to pay for their care and whose costs will be fully or partly covered by the Government.

The ratio varies depending on what geographic location the facility is located. It is designed to reflect the number of people in each area who are likely to require support from the Government to fund their aged care. In North Sydney, for example, the ratio is 16%. In Alice Springs, the ratio is 40%.

There is an exception to the ratio rule for those facilities that charge an “extra services fee” – a fee they can charge to their residents on top of the mandated care fees for additional hotel-like services. But many facilities that charge these fees do so only in some parts of the facility. They may make the decision to charge the fee on an individual basis, giving them flexibility to take on supported residents of lower means.

Of course, not-for-profit and mission-based providers will continue to play an important role in providing aged care to disadvantaged older people. One example is Wintringham Specialist Aged Care, who provide care to older people who have experienced homelessness.

But it would be wrong to assume that the larger for-profit providers do not cater to residents of lower means.