The high cost of staying alive

Following closely on the heels of the findings of the Royal Commission into Aged Care Quality and Safety tabled in 2021, a federal task force has been examining ways to reform the way aged care is funded. The ultimate aim is to find ways to curtail and reduce the annual cost (currently at $30 billion) to the Australian taxpayer.

With aged care costs predicted to almost double over the coming decade and with the taxpayer currently paying for 96 per cent of care in residential homes, funding quality aged care is an issue that demands solutions. The alternative to increasing the Medicare Levy, which would place a greater tax burden on the shoulders working Australians, is that the system shifts towards user-pays with wealthier seniors being required to contribute to (or pay for) the cost of their care.

No reasonable person should object to those who can afford to pay their way doing so, but the devil will, of course, be in the detail. Exactly who will be considered wealthy enough to pay? By way of comparison, parents earning up to $530,000 each year are not considered wealthy and are eligible for subsidized childcare. Moreover, the value of the family home has no bearing on the equation.

The burning question is whether this government or the next will be as generous with seniors in need of aged care as it is with parents in need of childcare. I tend to think not because the voting power once firmly held by the baby boomer generation is fast diminishing. Increasingly, the government will be courting the votes of younger Australians, and you do not have to be Einstein to know how that affects policy. So, what will be the ceiling for seniors to receive taxpayer-funded aged care, and (to throw in a really hot potato into the mix) will the value of the applicant’s home be included in eligibility requirements?

Basically, that’s the politics of it, but there’s an issue of principal, as well. When, for example, did the notion of universal health care cease to apply to those who were led to believe it was part and parcel of the social contract associated with them paying income tax all their working lives? In essence, the issue of funding aged care comes back to the opposing notions of funding by entitlement or funding by need. An illustration of this dichotomy is that private school advocates insist that private schools are entitled public funds (taxpayer subsidy) because private school parents pay tax. This group wants public money, whether it needs it or not. In relation to funding aged care, this equates to everyone being entitled to subsidised aged care. On the other hand, public school advocates insist that public money should only be spent where it is needed. In relation to funding aged care, this equates to subsidizing applicants based entirely on need.

There is also some currency to the argument that the lifelong hard work of wealthy (whatever ‘wealthy’ is deemed to be in this instance) Australians should not become the cash cow used to fund the aged care of others who have enjoyed a free ride all their lives. Of course, it must also be acknowledged that many Australians live unfortunate lives and experience financial hardship in old age, through no fault of their own. However, removing universal subsidized aged care may be enough motivation for some retirees to spend their nest eggs, rather than pay for what others receive for nothing.

Whatever recommendations the task force makes, prepare for change. Unfortunately, the unavoidable fact is that Australians are living longer and creating a demand for aged care that was unforeseen fifty years ago by the architects of Medicare. Without reform access to high-quality aged care cannot be guaranteed in the future. In the end, you get what you pay for – except if you can’t.