The future of aged care is home care, for better and for worse

The aged care taskforce report, with its recommendation that seniors be required to pay a significantly larger proportion of the costs of aged care rather than all taxpayers carrying the responsibility, has debuted this week to relatively little angst.

That will change when the government reveals how it intends to implement the recommendations around a pension-based mechanism for co-payments for “daily living services” in aged care, in contrast to caring services, which the report recommends be fully funded by government, and if it adopts the recommendation to allow providers to keep a small portion of the Refundable Accommodation Deposit that clients can currently use for their accommodation costs.

Judging by the hysteria from wealthy seniors, and the media coverage of it, when Labor proposed to take away their franking credit rort in 2019 — who can forget ABC’s 7.30 program interviewing an angry retiree on his yacht? — there may yet be a political storm at the next election, especially given wealthy seniors are a key Liberal constituency. Peter Dutton might decide to campaign on ensuring taxpayers continue to fund the aged care costs of wealthy Boomers.

That would leave the Coalition with the problem of funding the mammoth and rapidly increasing costs of aged care afterward, but it could fall back on the traditional Coalition approach of letting the system run down until a kerosene baths-style crisis erupts at some point in the electoral cycle beyond. Or it could decide, in the spirit of Tony Abbott attacking Labor’s middle-class welfare cuts only to impose even bigger cuts himself, to make wealthy seniors pay anyway. What are they going to do, vote Labor?

Nonetheless, there’s been a significant policy shift that has made and will make aged care less challenging. Getting people to age at home as long as possible has long been seen as the key both to minimising costs and maximising community and individual benefit. A form of home care package was introduced by the Keating government in 1992 and various forms of home care funding have been expanded ever since. The whole home care package system was overhauled by Julia Gillard in 2012 following a major Productivity Commission report, making it more client-centric and expanding it further. In the wake of the aged care royal commission, the system is again being overhauled so that by 2027 there’ll be a single Support at Home program with greater flexibility and a single provider invoicing the government against a set budget for each client.

The aged care taskforce shows that home care is the future of aged care. In 2022, for the first time, there were more recipients of home care than in residential aged care. While we’ll always need the latter, it is only projected to grow by a relatively limited amount in terms of the number of users over the next 20 years, whereas the size of home care will nearly double.

This has big implications for the sector. Home care is more attractive to both the private sector and not-for-profits: according to the taskforce report, “69% of residential aged care providers made an operating loss in 2021–22, an increase from 54% in 2020–21”, whereas “in 2021–22, 69% of [home care] providers reported an operating profit”.

Home care also requires fewer workers given there is no need to provide accommodation and support services. Currently, residential care employs nearly 280,000 workers, while home care employs 156,000. Funding home care is also much less complex, without the sensitive issue of accommodation bonds and raiding super or the family home to provide a Refundable Accommodation Deposit.

Home care also offers a simpler split of services and funding requirements. The taskforce says governments should pay most, or all, of the clinical/caring components of home care, there should be a more even split of independence-related services, and clients should pay most of the costs of ordinary living services they’d pay even if they weren’t in a home care program — such as cleaning.

But as home care comes to dominate aged care, it comes with its own problems. It is competing with the NDIS for a workforce — the taskforce deliberately shied away from the long-running and vexed issue of the aged care workforce, saying it didn’t have time to do it. Vetting service quality is more difficult than with residential (especially large residential) facilities, which can be spot-checked by the quality regulator. The home care sector rapidly grew as governments increased funding through the 2010s, but it has now entered a period of consolidation, which may weed out some of the more exploitive operators. However, the combination of government funding and potentially vulnerable clients in their homes will continue to present a tempting target for the unscrupulous.

For policymakers and the public at large, we need to change our conception of aged care. Soon it will no longer be about nursing homes, it will be about home care, with residential care as an end-of-life adjunct. And that’s a quite different industry.