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Seniors group quiz members on funding alternatives

But they leave bonds in high care off the options list.

The National Seniors Association (NSA) is developing a major policy statement on the best ways of funding aged care, including an online survey of members’ knowledge and preferences. But it has ruled out bonds for high care as a funding option in the research brief.

It expects to receive a final report from Access Economics in May or June, and then release it after it has considered the findings. This places it in firmly in the run up to the election, but possibly after the government has responded to the National Health and Hospitals Reform Commission’s recommendations on aged care.

The NSA online survey has attempted to summarise the major aged care policy options while seeking opinions on several options. However, it has not listed bonds for high care as an option, despite this being a major policy issue in the wider aged funding debate to date.

It added a new criticism of the current system of government funding for residential and community aged care through taxes. While it said “the main advantage is that it aims to be equitable, providing basic levels of care and support services to those who are assessed to need them”, it claimed its disadvantages “include a lack of efficiency, as for every $1 spent by government, around 29 cents is estimated to be lost through administration and other economic distortions”.

This figure- and argument not used commonly in debates on aged care funding – comes from a 1997 estimate presented to the OECD and sourced from the Productivity Commission.

Other disadvantages of the current system listed for consideration include that while it aims for equity there can be gaps, and choice is limited to what the government funds.

The survey, which provides a list of possible funding options (see panel) says private health insurance could be a source of additional or alternative coverage for aged care. However it does not explain why this option failed in the 1960s and early 1970s.

The survey then asks respondents to indicate and rank the options in terms of preferred aged care funding models, and in terms of sustainability, equity and choice.

NSA cannot yet say what preferences are emerging, except that it expects reverse mortgages to be the least popular.

It seems a big ask for the public generally, including seniors, to make such a knowledgeable assessment, based on the information provided. The answers on each option will need also to be treated cautiously, as respondents indicating indifference or ignorance on any option are in the same grouping despite being different responses.

Close to 4500 surveys had been completed at the cut off date of 19 March and the NSA expects the public discussion paper arising from the research will “make a significant contribution to the debate about the future of aged care”.

“The results will provide significant imput into NSA’s future policy submissions to governments,” NSA CEO Michael O’Neill said.

PANEL: Aged care funding options offered for consideration

Long term care insurance

The NSA survey says long term aged care insurance would allow people to insure through their adult life against the risk of requiring high cost aged care services in the future.

. more efficient/sustainable because less tax reliance

. still provides some safety nets for people who need them

. private insurers compete so likely to be more choices

. not addressing the problem that one generation funds the one before.

Healthy ageing savings accounts

Individuals could voluntarily contribute income at a reduced tax rate to a savings fund in their own name, where withdrawals would be restricted to spending on health and aged care services. This is similar to the tax advantages (15 per cent) of superannuation investments for retirement income.

. more efficient/sustainable because less tax reliance

. still provides some safety nets for people who need them

. savings account providers compete so likely to be more choices

. addresses the problem that one generation funds the one before (funds build up over time).

Reverse mortgages

Under this option people would be able to borrow money against the equity in their home (that is, the difference between what the home is worth and what is owed on it). These borrowings would then be used to fund their aged care needs.

. more efficient/sustainable because less tax reliance

. limited to people who have adequate equity in their home

. still provides some safety nets for people who need them

. improves choice as funds are freed up, but no direct incentives to service providers to meet needs.


Under the current system, government subsidies for aged care are paid to service providers. An alternative would be vouchers involving direct payments to people using aged care.

– equal to current system in terms of efficiency/sustainability – doesn’t solve tax problems

. like the current system, aims for equity but there can be gaps

. provides greater choice than the current system.

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