Governments are under no obligation to accept advice from the sector about costs and funding strategies.
The role of the Independent Health and Aged Care Pricing Authority was recently expanded to include modelling aged care provision costs and providing advice around aged care system funding.
However, IHACPA will fail if it cannot provide independent advice or if the government is not obliged to listen.
This is a real concern for the sustainability of the aged care system and its ability to deliver quality care in an equitable way.
The IHACPA is envisioned as a beacon of unbiased advice, guiding government decisions away from political pressures.
This is the role it has adopted in relation to Australian public hospitals funding.
In reality, the practicalities of such an arrangement for aged care are far from straightforward.
The problem is that, unlike in health – where IHACPA actually determines the annual national efficient price and national efficient cost for Australian public hospital services – in aged care, the government will simply review IHACPA’s recommendations.
That is, the government of the day will not be bound by such recommendation and will make its own decisions about the cost of providing aged care.
Here is the rub: aged care system funding decisions are not made in a vacuum; the government will always be under economic policy constraints (lest they be attacked by the opposition).
When the opposition attacks a government’s fiscal performance, they don’t refer to an overspend on ‘health’ or ‘aged care’ but rather attack the headline figure.
In the brave new world of clickbait and soundbites, there isn’t recourse to a discussion about how the money was spent.
Some argue it would be a very bad look for a government to ignore or reject the pricing advice of IHACPA.
This strikes me as a touch optimistic.
The government has never really cared too much about what the sector thinks and, frankly, the sector will be a lone voice of complaint if it perceives it is underfunded.
It is also fair to say there is a degree of scepticism within the aged care sector about the effectiveness of IHACPA in advising government of the real costs of providing aged care.
More than 70 per cent of providers are financially struggling.
In light of the varying cost structures faced by providers, the task of setting a uniform price across different modes of care (residential, home care packages, Commonwealth Home Support Programme) and a wide range of locations seems almost herculean.
The Modified Monash Model, which measures remoteness and population size for the purposes of government program eligibility, has been widely criticised as inequitable, and it remains to be seen whether there is a more effective tool.
The recently released NDIS Review has also recommended IHACPA take on NDIS pricing, which will further inflate its workload.
Fundamentally, IHACPA is going to need to engage meaningfully with the aged care sector if it is to meet this challenge.
This consultation needs to extend across Australia and include smaller providers and those catering to culturally and linguistically diverse or Aboriginal populations.
Such consultation needs to be transparent so it is clear how pricing decisions are going to be made and how those decisions align with the actual costs and quality of care.
Thought also needs to be given to implementation and the readiness of the sector to adapt.
This is particularly important in the context of the new single assessment and funding model being designed for home care.
What is clear is that IHACPA will identify a significant gap between current aged care system funding and the real cost of providing aged care.
In principle, this has been accepted by government, and an aged care taskforce has been established to consider how that gap will be funded.
Obviously, the extent to which the government of the day will accept IHACPA’s recommendation is up for debate, however, it seems clear that an increased user-pays component will ultimately be part of the solution.
In the end, the effectiveness of IHACPA’s role will be measured not by the elegance of its models or the sophistication of its advice, but whether its advice and recommendations translate into concrete policy changes and adequate funding, ensuring that quality care remains accessible and sustainable.
Despite the establishment of the aged care taskforce and the government’s acknowledgment of a funding gap, the sector remains apprehensive.
Many thanks to aged care and disability solicitor Andreas Geronimos for his contribution to this article.
- Amber Crosthwaite is a commercial lawyer specialising in seniors living, aged care and disability
