No support for aged care levy in Taskforce report

Nurse supporting elderly woman. | Newsreel
The Aged Care Taskforce has delivered 23 recommendations | iStock

The Aged Care Taskforce has advised Government not to introduce an aged care levy, but help the industry transition out of the Refundable Accommodation Deposit (RAD) system.

In its final report, the Taskforce delivered 23 recommendations and outlined a series of key principles for aged care funding.

While it recommended Government should continue to play a key role in funding of aged care services, it did not see the need to impose a new levy on taxpayers.

The report also detailed a transition out of the current Refundable Accommodation Deposit (RAD) system, dependent on an independent review, to a rental-only model.

The full list of recommendations are:

  1. Underpin the Support at Home Program with inclusion and exclusion principles and clearly defined service lists.
  2. Continue the significant role for government funding of aged care services. A specific tax or levy to fund aged care is not recommended.
  3. It is appropriate older people make a fair co contribution to the cost of their aged care based on their means.
  4. Ensure a strong safety net for low means participants to meet aged care costs.
  5. Make aged care fees fairer, simpler and more transparent so people can understand the costs they will incur if they access aged care.
  6. Establish appropriate arrangements to allow older people and providers to smoothly transition to any new arrangements, including grandparenting arrangements for those already in residential aged care and phasing in for home care.
  7. Establish a fee-for-service model for Support at Home that ensures participants only pay a co contribution for services received.
  8. Introduce Support at Home participant co contributions that vary based on the type of service accessed.
  9. Continue to focus government funding in residential aged care on care costs, with a significant role for resident co contributions in non-care components.
  10. Funding for daily living needs to cover the full cost of providing these services. It is recommended this be composed of the Basic Daily Fee and a supplement.
  11. Enable residents and their representative and providers to negotiate better or more daily living services for a higher fee, subject to at least publishing prices and services, only allowing agreement to higher fees for agreed services to be made after a participant has entered care and a cooling off period and regular review opportunities to ensure the resident still wants the services and can still use them.
  12. Following an independent review in 2030, transition the sector by 2035 to no longer accept RADs as a form of payment for aged care accommodation and move to a rental only model, provided that the independent review finds there is improved financial sustainability, diversified and adequate sources of capital to meet future demand and residential aged care is affordable for consumers.
  13. Require providers to retain a portion of the RAD in the near term to make an immediate improvement to sector financial sustainability. Base the amount on length of stay, with a cap on the number of years a RAD is subject to retention to protect residents who stay for a long time.
  14. Review the Accommodation Supplement, including improving incentives to meet the accommodation design principles.
  15. In addition to the other accommodation recommendations, develop a package of measures to improve accommodation funding, equity between residents and transparency in the near-term. This will help place accommodation income on a long-term sustainable footing and position the sector for the ultimate phase out of RADs.
  16. Establish appropriate safeguards and incentives to protect access to residential care for supported residents.
  17. Consider the appropriateness of the current remoteness classification system.
  18. Continue block funding in thin markets where appropriate and necessary. Consider any other supports necessary to ensure access to care in under serviced markets.
  19. Consider ways to encourage providers to develop and scale innovative care models, invest in technology, and conduct research into best practices, including through the recommendations outlined in this report to improve the viability of the aged care sector and tasking the Aged Care Quality and Safety Commission with supporting innovation by identifying innovative practices and promoting these across the sector.
  20. Raise awareness of existing financial products that enable older people to utilise their wealth in retirement and provide confidence they can afford future aged care costs.
  21. Task the Behavioural Economics Team of the Australian Government (BETA) to provide advice on how to encourage people to consider their future aged care needs at an appropriate stage of life.
  22. Review and streamline financial reporting to government where possible to ensure reporting is genuinely enhancing transparency.
  23. Improve communications between the Independent Health and Aged Care Pricing Authority (IHACPA) and providers and participants regarding its pricing advice and decisions, and task IHACPA with a review of its pricing in rural and remote areas and costing of the supplement for everyday living.

Underpinning the recommendations are seven key principles of aged care funding:

  1. The aged care system should support older people to live at home for as long as they wish and can do so safely.
  2. Aged care funding should be equitable, easy to understand and sustainable.
  3. Government is and will continue to be the major funder of aged care. Government funding should be focused on care costs as well as delivering services in thin markets. Personal co contributions should be focused on accommodation and everyday living costs with a sufficient safety net.
  4. The residential sector should have access to sufficient capital to develop and upgrade accommodation, including in rural and remote areas and First Nations communities.
  5. Aged care funding should be sufficient to deliver person-centred, quality care by a skilled workforce.
  6. Aged care funding should support innovation to improve aged care services and their relationship with the health and hospital systems.
  7. There should be transparency and accountability for how aged care funding is received and spent while minimising regulatory burden.

Read the full report