Saturday, April 21, 2012

The aged care package explained

HOW can a government that has locked itself in a fiscal straitjacket conjure up $3.7 billion of new funding for aged care? Simple: it hasn't.

Strip away the spin, and you find that in budget terms, there is just $285 million of new funding over the next four years.

That's no bad thing, if it means the $14 billion a year the government spends on aged care will be spent more efficiently, or better targeted to meet the most urgent needs.

These reforms will increase funding to allow older Australians to be cared for at home, to meet the real costs of dementia, and to pay aged-care workers a decent wage.

Importantly, they end the tenuous distinction between high-care and low-care places between hostels and nursing homes, in the old lingo and offer a choice of payment options that appears fair to patients and providers alike.

But this will be paid for mostly by redirecting money from existing programs. Canberra will pay nursing homes more for each aged-care patient, but cut the planned growth in nursing home beds. It will make better-off patients pay more, and make taxpayers put in a bit more.

The new programs will cost $2.2 billion over four years, most of it after the main changes take effect in July 2014. To make it sound bigger, Julia Gillard added a fifth year of spending ($1.5 billion in 2016-17), but that will not be in the budget.

Roughly 75 per cent would be paid for by taking money from existing programs for nursing homes, home care, aged care advice, etc. Some of that will be redirected to new programs, some to old ones in new wrappers.

Most of it would come from one saving: $1.1 billion over four years from "refining" the Aged Care Funding Instrument, the system of 65 classifications that determines how much nursing homes are paid for each patient.

Audits have found that some homes are overcharging taxpayers by classifying patients as more disabled than they are. It is unclear how widespread this practice is or how the government would change the rules, or, as Anglicare's executive director Kasy Chambers warned, whether it can save so much.

Of the rest, $257 million will come from tighter means tests on funding for residents in home care or residential care.

Those with incomes and/or assets above the threshold for the full pension will pay fees on a sliding scale up to maximums of $10,000 a year for home care and $25,000 a year for residential care.