A 1.01% tax increase – or a 0.89% hike in the Medicare levy – would raise the level of care in the aged care system to a ‘four-star’ rating – and fit within the amount that Australians have said they are willing to pay for high-quality care – according to the Royal Commission into Aged Care Quality and Safety’s 11th research paper by economic advisory firm Deloitte Access Economics.
The 45-page report – released yesterday – concludes that under this model, Commonwealth aged care spending would rise from $20 billion this year to $45 billion in 2030 and $151 billion by 2050.
The highest level ‘five-star’ system (we assume this star rating refers to the American model of ranking facilities) would require a 1.48% increase in income tax or a 1.31% increase in the Medicare levy, with expenditure climbing to $50 billion by 2030 and $171 billion by 2050.
Both figures are well below the 3.1% more income tax numbers that the 10,000 people surveyed for the Commission’s sixth research paper by Flinders University said they would be willing to contribute for better-quality care – suggesting the plan is more than feasible.
The report says the funding would go towards supporting a wide range of reforms including:
- mandatory four-star staffing levels in aged care homes
- other workforce improvements such as mandatory Certificate III training for personal care workers and a national personal care worker register like in other professions that work with vulnerable people
- uncapping the number of Home Care Packages so people “receive the care they need rather than languish on a waiting list”
- improved access to GPs, psychologists, dentists, and rehabilitation
- providing respite for families caring for elderly relatives at home
- getting young people with a disability out of aged care homes into accommodation appropriate for them
- new teams of case managers giving face-to-face support to people who need help to access aged care services
- improved resourcing for public guardians to help the most vulnerable elderly people without family or friends to support them
However, the workforce demand would be high.
A four-star system would require 30,000 new full-time equivalent jobs to be filled – or higher given many workers are part-time or casual – plus another 50,000 workers just to meet the growing number of older Australians requiring care services.
The report also forecasts that the number of FTE Registered Nurses in the system would need to be doubled – from 22,000 in 2020 to almost 41,000 in 2030 and over 58,000 by 2050.
To attract more workers, the research suggests raising pay rates in aged care to be the equivalent of hospitals with a 5.5% a year increase – more than double the economy-wide average – for nurses and other skilled jobs in aged care up to 2050 – 30 years away.
The skilled migration program for workers with aged care skills would also be required to be significantly expanded.
Is this a realistic scenario though?
It is evident that more funding will be required, even if the Royal Commission succeeds in shifting aged care in Australia towards care at home – which would decrease some of the funding required for residential care.
“Despite slower growth in recipient numbers, Residential Care will continue to account for the bulk of commonwealth funding for aged care. That said, HCP spending will be rising rapidly over coming decades,” the paper states.
Tax increases to fund large-scale reforms are also not unheard of.
The Medicare levy – currently set at 2% of taxable income – was increased by 0.5% in 2014 to cover the costs of the National Disability Insurance Scheme (NDIS).
But as we previously discussed, are Australians really prepared to see their tax bills go up or pay more for services?
The Government also has little data on the true costs of care services.
It will take strong leadership from the Government to commit to addressing both issues.
The Royal Commission will be delving into the funding, financing and prudential regulation of aged care next week with seven days of hearings scheduled for 14-22 September.