Aged care costs could blow out significantly over the next two decades as the Baby Boomers move through the system, actuaries have warned.
A green paper released by the Actuaries Institute forecasts that aged care sector costs will increase by 7% per annum for the next 20 years, making it the fastest growing line item in the Budget.
While current funding accounts for around 1.6% of GDP, or $32 billion per annum, that figure is expected to rise to 2.9% of GDP as Baby Boomers age and require more support.
According to Jefferson Gibbs, president of the Actuaries Institute, solutions such as increasing consumer contributions to aged care costs should be considered in order to alleviate the strain.
“As Australia’s population ages and as our Baby Boomers are just now beginning to enter the Aged Care system, the question of how we best meet the needs of those requiring some form of Aged Care to enable a life of dignity is becoming more urgent.
“Finding sustainable financial solutions, and meeting the changing needs and expectations of society, will depend on understanding the demographic, economic, social and health trends driving demand over the coming decades,” he said.
The latest issue of SATURDAY features an article on “user pays” as a potential solution to rising aged care costs; it is available here.
