Plaudits for reform, but a lot of angst, too
Sydney Morning Herald
Saturday January 22, 2011
AN OVERHAUL recommended for the aged-care sector has been applauded by many advocates but has caused anguish among some seniors groups.The Productivity Commission published draft reforms for the $10.1 billion sector yesterday that would revolutionise how the system is funded.Wealthy people would pay as much as 25 per cent of their costs, while those with less would contribute 5 per cent.And for the first time the family home would count towards a person‚„s ability to pay.Among the recommendations is a government-backed equity release scheme in which older people could draw against the value of their house.Such loans would require no repayments until the home was sold, in effect delaying repayments until after a person‚„s death.The chief executive of National Seniors Australia, Michael O‚„Neill, voiced concerns that older people would not have time to plan financially.‚œ‚œIf you‚„re 50 you‚„ve got plenty of time to adapt your arrangements.If you‚„re 80 you‚„ve got no option and nor should you at that time of your life be stressed with a major policy change of this kind.‚„‚„ Older people also felt an attachment to their homes and would be distressed to take out loans against them, he said.‚œ‚œWe only treat the house as a financial asset. We don‚„t recognise it as an emotional asset that people have built up for 60 or 70 years in some cases.‚„‚„ By 2030 older people will own 47 per cent of the nation‚„s household wealth, while accounting for only 20 per cent of the population.A study in 2005 of 7000 people aged 50 or older found they were becoming less concerned about leaving an inheritance to their children.The Australian Housing and Urban Research Institute paper said in a submission to the inquiry: ‚œ‚œMany older people‚„s attitudes have taken on more of those of their baby boomer children; that is ‚œput yourself first.‚„ ‚„‚„ Similar loans, called reverse mortgages, are considered risky.With compound interest and no repayments, debt can accrue quickly and end up greater than the value of the house.The institute told the inquiry that home owners could be exposed to high interest rates, falling property values and default conditions that can trigger immediate repayments.Yesterday the co-ordinator of the OlderWomen‚„s Network, Beth Eldridge, said ageing couples could be disadvantaged. She gave the example of people stretching their finances to put their partners into a nursing home.‚œ‚œWhat happens when they need to go into care? Why is it thatwe have to keep pushing and pushing people who have nothing left? It‚„s just cruel. It‚„s like a HECS scheme for the elderly.‚„‚„ Neither of the two main political parties would endorse the proposals yesterday. The opposition accused the government of repeatedly delaying reform and sought to link it to the priorities of the Prime Minister.The spokeswoman on ageing, Concetta Fierravanti-Wells, said: ‚œ‚œThis government simply shunted off aged care to the Productivity Commission and simply got it off the agenda before the last federal election.‚„‚„ The chief executive of the aged dementia specialists Hammond- Care, Stephen Judd, said most people would welcome a new funding model.‚œ‚œPeople individually are quite happy to provide for their own health and aged care needs, but sometimes relatives can‚„t wait to access the funds of their not-yet deceased parents.‚„‚„THE SYSTEM NOW 2011Government spending $10.1 billion.Affects more than 1 million olderAustralians.Struggles to attract and keepworkers; offers poor wages.Offers inconsistent quality of care.Overlapping regulation.THE CRUNCH BY 2050 2050Number of Australians requiringcare will triple to 3.6 million.Diversity will increase with moreolder people from Aboriginalor non-English speakingcountries.Costs to increase to 1.8 per centof GDP from 0.8 last year.FUNDING OVERHAUL RECOMMENDATIONSOlder people should pay upto 25 per cent of care costs,depending on ability to pay.Minimum contributions will be5 per cent, with a hardshipprovision.Maximum lifetime paymentsto be capped at $60,000.Assets including the familyhome would be considered inmeans testing.Government should back an equityrelease scheme. Older people woulddraw money against value of theirhouse. Such loans would require norepayments until the home was sold.Aged care pensioners would retainpayments when selling their homes.Older Australians to pay foradditional services that go beyondthose deemed necessary throughhealth assessments.Older people need Easier access to services and basic information.A single agency to provide health information, assessments for care needs, meanstests and advice on providers. Flexible care arrangements Emphasis on restorative care and rehabilitation; delay premature entry into full-time care. Choice of care provider and option for care either at home or in a residential facility.
© 2011 Sydney Morning Herald