PM to unveil user-pays changes to aged care

The reforms will expect older and relatively well-off people to pay more for aged care by expanding the aged-care means test. The package also focuses on improving care at home and in retirement villages to reduce reliance on nursing homes, with some in-home care funding coming from reduced subsidies for residential nursing homes. The changes are being unveiled by Prime Minister Julia Gillard and Health and Ageing Minister Mark Butler.

No — the government says it will not force older people to sell their homes. However, the proposals are likely to expand the means test to include the family home, and people could be encouraged to use home equity (for example via a reverse mortgage or a home credit scheme) to pay for care. Such loans would typically be repaid when the home is sold after the person dies, unless a spouse or a disabled child still lives there.

According to the article, some of the money for boosted in-home care will come from reducing subsidies for nursing homes. The package shifts funding emphasis toward in-home and retirement-village care while trimming support for residential care.

The Productivity Commission recommended moving aged care from a rationed system to one that is both means-tested and needs-tested. It suggested including the family home in the means test and allowing people to use home equity — for example through a reverse mortgage or home credit scheme — to help pay for care and accommodation.

Taxpayer-funded research from the Council on the Ageing found widespread concern about residential care and a strong preference among older people to live independently at home, with occasional help for domestic chores rather than moving into nursing homes.

Expanding the aged-care means test — especially if it includes the family home — is politically sensitive because it means the older and better-off would be expected to pay more for care. The article notes the means-test expansion will be the most controversial part of the package and that the announcement was important enough for the Prime Minister to delay a high-value fundraising event to return to Canberra for it.

The government is shifting focus toward in-home care and retirement villages to reduce reliance on nursing homes, and it plans to reduce some nursing-home subsidies to fund in-home services. That could change demand dynamics between residential aged-care providers and in-home or retirement-village services, although the article does not provide detailed financial impacts.

The announcement is being unveiled by Prime Minister Julia Gillard and Health and Ageing Minister Mark Butler. The article mentions Ms Gillard postponed a $5,500-a-head fundraiser dinner at Woodside Energy's Perth headquarters so she could rush back to Canberra for the announcement.