Aged Care: Human Right or a market opportunity

Oct 12, 2020

The overwhelming evidence is that, after more than two decades, the private-for-profit market model has not resulted in the improvements that were expected – more competition, more choice, improved efficiency, improved access and so on. It is time to conclude that aged care should no longer be framed as a private market. If it has not worked until now, there is no reason to expect it to work in the decades ahead.

It is not often that aged care becomes a political issue, one that might even change how someone votes. But that is what has happened in 2020 as COVID-19 has ravaged aged care homes, initially in NSW and then in Victoria.

Frail, vulnerable people in residential care now represent 75% of all COVID-19 deaths in Australia and aged care has become a hot political issue, especially among the tsunami of baby boomers entering old age.

Aged care is a federal government responsibility. Deaths in aged care cannot simply be blamed on the states. The Coalition government has responded with numerous short-term, piecemeal measures while reassuring the public that it understands the aged care system has serious failings. It has continually pointed to the Royal Commission, due to report next February, as evidence that the government knows it has a problem. It has created a clear expectation that it intends to act on the recommendations.

So, what might we expect to see in the Royal Commission final report? It will clearly recommend more funding and more regulation. Such recommendations will send a message that the Commission has heard the significant concerns about unsafe and unkind care raised by older people and families in more than 10,000 submissions.

COVID-19 has only amplified these concerns, with long-term systemic failings in aged care receiving significant media coverage.

The aged care sector was expecting a large down payment in last week’s budget but that did not happen. Instead, it contained piecemeal measures. But the political imperative to respond in 2021-22 must be strong. There is no point calling a Royal Commission if you intend to ignore it when it reports.

Additional funding in the 2021/22 budget will be loudly welcomed by the sector and will largely satisfy community concerns that the problems in aged care have been tackled. From a political perspective, the hope will surely be that aged care is ‘fixed’ and goes back to being a political non-event.

But the billion dollar question is whether the Royal Commission goes further and, if so, whether the government will respond. The Royal Commission will be delivering its report in unprecedented economic times. Making aged care a small target for reform must be considered a real option.

More funding and regulation will achieve short-term improvements and will be perceived as addressing community concerns. However, the Commission could rightly judge that more funding and regulation will be quick fixes that will not go anywhere toward tackling the structural and systemic issues that are at the heart of our failing aged care system.

At its heart are key questions about the role of aged care, the role of the market and the interface between aged care and health care.

The role of the aged care system

The Royal Commission’s interim report, ‘Neglect’, did an excellent job setting out the numerous deficiencies of the system. It provides an important reference point for judging the final report and the government’s response.

A fit-for-purpose system will need to meet key public policy objectives:

  • Equity and fairness – it should ensure the needs of older Australians, including the most vulnerable, are addressed.
  • Quality and safety – older people should not be at risk of ‘neglect’.
  • Accessible and responsive – the system must be capable of accommodating the needs of individuals and their communities, including those with special needs (geographic, cultural, LGBTIQ and so on).
  • Efficiency – the system must be affordable for those who pay for it. This includes taxpayers and care recipients.
  • Sustainable and predictable – to enable certainty and transparency for governments, providers and older people.

The role of the market

The Commission concluded in its Interim Report that:

“The structure of the current system has been framed around the idea of a ‘market’ for aged care services where older people are described as ‘clients’ or ‘customers’ who are able to choose between competitively marketed services… It is a myth that aged care is an effective consumer-driven market”. (Vol. 1, page 10)

After more than two decades of aged care being framed around the concept of a competitive market, the Royal Commission has received thousands of submissions outlining numerous market failures.

The question now is simply: should the Commission conclude that aged care should continue to be financed and regulated as a private market, albeit with more effective controls?

Alternately, should the Commission conclude that the market is not the best way to finance and regulate aged care and that other approaches are required? An extension of this question is whether aged care should be framed as a universal entitlement system or as a safety net under those who cannot finance their own care needs.

In their submission on program design (4 March 2020), Senior Counsel argued for the uncapping of the supply of funding packages and places, essentially suggesting the uncapping of taxpayer funding. You cannot have one without the other.

But no one would seriously suggest that taxpayers should commit to an uncapped taxpayer-funded private market, whereby significant additional taxpayer money would be poured into the system only to be taken out at will as profit?

That is not palatable. Yet aged care needs more funding and taxpayers will inevitably be asked to pay the bulk of it. The only sustainable way to achieve that is through structural and systemic reform.

The overwhelming evidence is that the private-for-profit market model has not resulted in expected improvements – more competition, more choice, improved efficiency, improved access and so on. It is clear that aged care should no longer be framed as a private market.

Aged Care should sit alongside Medicare

Aged care needs to be repositioned to sit alongside Medicare:

  • A national universal access program in which older people are entitled to care based on their needs.
  • A publicly funded and regulated system that is agnostic about the legal status of providers. Providers may be government, not-for-profit or for-profit organisations.
  • While co-payments may be paid based on ability to pay, most of the costs are, and will continue to be, met by taxpayers.
  • A national social care program with public accountability.

Such a move would be an important statement from a public policy perspective. Medicare is a publicly funded and regulated program with mixed providers (government and non-government) and some co-payments. Medicare is enjoys overwhelming support. While there are many private providers, no one would conceptualise Medicare as a private market. Aged care should be no different.

Aged care as a human right

An extension of this is the need to reframe aged care around human rights. This would include a new Aged Care Act and a legally enforceable code of human rights. Quality standards are essential but are not enough. Human rights involve a legal requirement for ethical decision-making, informed consent and legal protection.

Interface between aged care and health care

Aged care cannot be separated from health care. People do not need aged care because of their age but because they develop health conditions that result in cognitive loss, behaviour issues and/or frailty and so on.  Social isolation and needs are the consequences of the health problems, not the cause.

Therefore, while a social care system for older people is essential, it is still not enough. Aged care has five domains – health, function, social, residential and end-of-life care needs. Aged care needs to be financed, delivered and be held to public account for all five.

It is yet to be seen whether the Royal Commission takes the easy option and makes recommendations that treat aged care as a silo or whether it recognises that long term reform requires aged care and health care to be seamlessly integrated. While much more difficult it is essential for sustainable improvement.

We will get some clues when Senior Counsel make their final submissions on 22 and 23 October. The real test will be what happens on the ground.

Share and Enjoy !

Subscribe to John Menadue's Newsletter
Subscribe to John Menadue's Newsletter


Thank you for subscribing!