An internationally-recognised authority on government finances has taken a different view, arguing a HECS-type model to fund aged care misses the point of reform.
Dr Marc Robinson, former member of the OECD Advisory Panel on Budgeting and Public Expenditure and former staff economist at the International Monetary Fund, says any funding needs to protect an individual from the likelihood of needing particularly long periods of expensive residential care.
“Everyone should be protected against this risk through social insurance, which would pay for aged care costs above a certain threshold. That way, those who end up being part of this unlucky minority would be protected from the huge financial burden of care,” he argues.
“Everybody should pay a premium – in the form of a supplement to the Medicare levy – in order to pay for this insurance.”
“In principle, aged care insurance could be provided either by the government or by private insurance companies. However, international experience shows that, for such insurance to work, it has to be compulsory for everyone. And if insurance was provided by private insurers, it would have to operate under a system with a standard policy and premiums regulated by the government,” he said.
“Overall, a government insurance system would be simpler and more efficient.”