Aged Care Sector Financial Comparators

These days I only read the newspaper on the weekend.  My favourite is still The Weekend Australian.  It often has thought provoking articles, and occasionally some fodder upon which one can reflect from an aged care sector perspective.

The December 8-9, 2018 edition is just one of those occasions.

On page 2, there is an article bemoaning the recent year upon year increase in private health insurance premium rates.  The article reports that ‘Health Minister Greg Hunt … expected to approve an industry average below 3.95 per cent … the lowest since 2001.’ It also includes commentary about the anticipated significantly lower rate increase out to 2022 promised by the current Federal Opposition.   

According to Australian Prudential Regulation Authority (APRA) figures cited by The Weekend Australian, the industry weighted average premium increases approved by the Minister for Health since 2015 are as follows:

2015: ​​6.18%

2016: ​​5.95%

2017​​: 4.84%

2018​​: 3.95%

2019​: Under​ 3.95%

I understand the impact of high levels of private health insurance premiums, that seem reachable by those who for whatever reason determine them to be affordable.  What is more, in contrast to aged care funding, the payment of insurance premiums does not come from the Government purse, but rather from individuals who have determined their affordability.

I find this article useful, if only because for almost the past twenty years I have been monitoring Health Ministers making similar approvals for health insurance premium increases yet at the same time, as the senior Minister over the aged care portfolio, makingstarkly lower indexation for payments for recipients of care or, more indirectly, to the providers of care to aged care recipients.

The comparison of funding increases made to aged care providers through the various indexations against several alternate indicia is shown below:

The chart above clearly shows that whilst aged care funding indexation has indeed kept fairly much in line with CPI, it has failed to keep close to Work Price Index (“WPI”), Average Weekly Earnings (“AWE”), and the greatest gap is between aged care funding and private health insurance premiums.

I will be among the first to say that additional funds are not always the determinant of better quality.  Yet the absence of an equitable funding methodology in residential aged care since 1997, and growing concern about insufficient supply of places in community based aged care since February 2017, seems obvious.  

Inclusive of some $1.7 billion removed from forward funds in 2015 and 2016, there is a clear pattern of diminishing Government expenditure in aged care over the past twenty years to a point where it is highly unlikely that even courageous and good providers of care will be able to sustain their service provision without a sizeable injection of funding.

It has been just three days since the Federal Standing Committee on Health, Aged Care and Sport recommended support for the Aged Care Amendment (Staffing Ratio Disclosure) Bill 2018.

I support the recommendation that aged care providers disclose their staffing ratios. However, it would be unreasonable to expect that providers will be able to achieve a reasonable staff ratio without an immediate and substantial injection of funds – albeit with reporting requirements.

Perhaps the Royal Commission can consider this matter in their review processes into the whole aged care sector quality and safety funding and performance?

Nice chatting

Wayne L Belcher

Bibliography

Alex Grove, Residential aged care funding: recent developments Parliament of Australia

House of Representatives Standing Committee on Health Aged Care and Sport, ‘Advisory Report on the Aged Care Amendment (Staffing Ratio Disclosure) Bill 2018’ (Commonwealth of Australia, Canberra), December 2018 

Sean Parnell, ‘Rise in health premiums likely lowest in decades’, The Australian (Sydney, NSW), 8 December 2018

One Reply to “Aged Care Sector Financial Comparators”

Leave a Reply

Your email address will not be published. Required fields are marked *