A shock increase in aged care costs could be included in this year’s Federal Budget if Treasury heeds a call to force pensioners to pay more for nursing home services, according to a report this week on retirement website YourLifeChoices.
The proposal by insurance company Bupa recommends that the capped value of people’s homes be increased from the current $162,087.20, so those with valuable homes are asked to pay more for care.
The capped value is used in an assets test to determine how much out-of-pocket individuals using aged care will be if they do not sell their home.
On average, the Government forks out about 70 per cent of aged care costs, leaving elderly people needing care to pick up the balance.
Bupa’s suggestion is contained in its 2018-2019 Pre-Budget Submission.
In the submission, the insurer urges the Government to “seek out and carefully consider the views of Australians on the Productivity Commission’s and Tune Review’s recommendations” to increase the cost of aged care services for individuals.
Bupa believes it is necessary “to increase consumer contributions to aged care from those who can afford it, while providing a safety net for those who cannot”.
Before changing the aged care funding policy, the insurer “strongly encourages” the Government to consider “at least increasing the capped value of the owner’s home in the means test and increasing the annual lifetime caps”.
The number of Australians aged 85 and over is projected to more than quadruple by 2050 to 1.8 million people, according to the Australian Bureau of Statistics.
However, last year Aged Care Minister Ken Wyatt said that up to 1.3 million people received some form of assisted care in the previous 12 months. The Government spends more than $17 billion a year on the sector and Mr Wyatt projected this would rise to $21 billion in 2019.
Bupa argues the future older demographic will stretch demand and spending on nursing care for the elderly. It added that the situation would worsen partly because of the “expected relative decline in family support and informal carers”.
More than 200 submissions seeking to influence the direction of the Budget have been published by Treasury since September.
National Seniors Australia’s submission for the 2018 Budget will be released soon, but has consistently campaigned for improvements to the aged care sector and against health insurance premium increases.