Chapter 4

Lifetime contribution caps

4.1        Many submissions raised concerns that the proposal to set annual and lifetime caps on contributions at $60,000 does not recognise the increasing trends in life spans of older Australians and the benefits to residents of the quality of care and services that are the foundations of these longer stays in residential care.[1]

4.2        Coalition Senators are concerned that this proposal has been ill-considered and backed-up with insufficient financial modelling to ensure confidence and certainty of the economics of the proposal.

4.3        The government’s own program is called Living Longer, Living Better and is at odds with the fact of this proposal.

4.4        In a simple calculation using the Standard Resident Contribution of $44.54 per day, the proposed limit of $60,000 will be reached in around 44 months.  In another example, using the proposed level 2 threshold of $85 per day, the cap will be reached in less than two years. 

4.5        At issue, the cap in contributions is for those costs related to care.  Simply doing the sums with the current fees and charges and the current average length of stay demonstrates the inadequate amount of consideration given to this proposal. 

4.6        It is an unavoidable fact that the aged care budget is under extreme pressures.  The proposed level of lifetime contribution caps will undoubtedly increase those pressures in the future.

4.7        Coalition Senators are concerned that the Government and those external organisations that support this proposal have not completed the necessary detailed modelling and essential considerations.

4.8        Our position on this issue is supported by evidence from Ms Julie Christensen, CEO of Narrogin Cottage Homes who states:

Although the average time a resident will reside in an aged care home has reduced substantially over the years as a reflection of “staying at home for as long as possible”, many RRR facilities due to a complex admission methodology involving distance, access to services, transport, housing etc appear to have longer residency stays. This data should be available from the Medicare data bank.

As such, there is we feel a real need to extend this life span to $80,000 or there is risk that the burden on the public purse will be greater than anticipated.[2]

Recommendation

That the lifetime cap and its specified level be reconsidered subject to further modelling and analysis of the impact of the lifetime cap on consumers and the industry.

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