Report Calls For Action Over Creaking Aged Care Model

Lillian
Hanly Political Reporter

An advisory group tasked
with assessing the aged care model is sounding the alarm,
saying the system is “at a turning point” and “major
systemic reform must start now”.

“While many older
people are supported well, current settings will not be able
to meet future demand safely, equitably or sustainably
without major deliberate system change,” it said.

The
Ministerial Advisory Group on Aged Care in New Zealand,
chaired by former Labour minister of health David Cunliffe,
has made 40 recommendations in total, including the
government committing to “significant price uplifts” and
lowering the threshold at which people with assets must pay
more towards their care.

It warned if there was no
change, there could be a shortage of more than 9000
residential beds in just over a decade, at an additional
cost to the government of nearly $600 million a
year.

But even the recommended course of action is
only somewhat cheaper than the worst-case scenario, with all
projections costing billions of dollars.

Late last
year, Associate Health Minister Casey Costello said there
were “major political considerations” attached to any
changes in the
aged care system and so an independent group was needed
to make recommendations. Long-term thinking and a bipartisan
approach were also needed.

On Monday, she said the
government had appointed the group because it wanted ideas
for reform.

The 186-page report, titled A place to
grow old: Securing the future of aged care, was released
on Monday. It said that “if we do nothing there will be a
mountain of unmet need, alongside a much higher demand for
hospital beds”.

The advisory group was tasked with
considering the way services were funded and how costs might
be shared, as well as how care systems and health services
might be better integrated, and provide
recommendations.

It tested possible scenarios and came
to the conclusion there was “no alternative but fundamental
reform”.

“The only real choice is between a hard set
of changes made deliberately now, or a more painful set of
changes forced on the country later.”

A system “under
pressure”

The report said there were not enough beds
in residential care for the number of people who would need
them, and not enough workforce to care for those
people.

“That is not only a projection for the future
– it is already starting to happen.”

It specified the
whole country’s aged care system was under real pressure
today, and “those pressures will only grow as the population
ages”.

New Zealand’s aged care system was built for a
“different era”, the report said.

There are about
950,000 people aged 65 and over, with that number expected
to reach about 1.3 million by 2040.

“In 1996, about
one in 10 people in New Zealand were aged over 65,” it said.
By the 2050s, this would be one in four.

People were
living longer and coming to residential care with more
complex needs. That growing need would place even more
pressure on hospitals, emergency departments, GPs and
residential care.

The report also outlined “well
recognised inequities” in aged care that were “structural
and compounding”.

“Māori, Pacific and Asian people
are much less likely to be living in residential care in
advanced old age.”

The report described long-standing
workforce challenges that constrained service delivery, and
that workforce capability and capacity had “not kept pace
with the growing demands placed on in-home and residential
providers”.

As well, it specified the aged care system
was under “sustained financial pressure”, with funding no
longer keeping pace with the rising costs of delivering
care.

The government spends more than $2.5 billion
annually on aged care, including in-home care and aged
residential care.

Three scenarios

The advisory
group tested the outcomes of three
scenarios:

• Scenario A – Do
  nothing
• Scenario B – More funding
  pumped into the system
• Scenario C –
  Structural reform

The report showed that in
scenario A, the national shortfall in residential care
capacity would increase significantly. Not only would this
leave older people without care but it would shift the cost
into the hospital system, the report stated.

This
situation would see direct costs to the government and the
health system grow. A shortage of more than 9000 residential
care beds by 2037/38 would cost the government nearly $600
million more each year.

The total cost to the
government would reach $4.4 billion.

For scenario B,
the group noted that spending more would alleviate
short-term supply pressures for a while but that it “rapidly
becomes unaffordable”.

This scenario noted that the
projected cost to build an additional 10,000 beds would be
$2.6 billion.

In this scenario, total aged care costs
(both government funding and private contributions) would
rise from about $3.9 billion in 2025/26 to $5.1 billion in
2028/29 and to over $9.3 billion by 2047/48.

By
2037/38, the government cost would reach $4.6
billion.

For those in care making private
contributions, the total would increase by 17 percent from
$1.4 billion in 2025/26 to $1.8 billion in 2028/29, and by
135 percent to $3.3 billion in 2047/48.

The 2047/48
costs would average $49,700 per resident.

Scenario C
looked at a set of major reforms to help moderate futures
costs.

The four major levers were supporting more
people at home and reducing avoidable hospital stays; better
targeting of residential care funding through differentiated
pricing; rebalancing how we share the costs of care; and
initiatives to improve in-home care and improve efficiency
across the system.

The group’s modelling estimated
scenario C would cost around $3.7 billion in
2037/38.

The report emphasised that without reform,
the costs would continue to blow out as the population
aged.

Recommendations

The group made 40
recommendations in total.

They suggested “an
integrated system”, reforming it into a single system
encompassing in-home care, residential care, end-of-life
care, and wider health and social services.

The report
recommended streamlining assessment in the aged care system
and modifying current assessment tools to take into account
various other elements, such as cultural needs or
non-clinical social factors.

It also suggested changes
to contracting and regulatory settings, and it said the
government should commit to “significant price uplifts”
within two years.

For in-home care, that would look
like a 6 percent increase next year (costing about $30
million) to address rising costs and a further investment in
2028/29 to grow the sector’s capability to deliver
care.

For residential care that would look like a 7.1
percent increase in per-bed prices next year.

The
group also suggested fundamentally restructuring the funding
model for aged care services and stated that as a principle,
public funding should prioritise essential needs-based
care.

It also recommended the threshold at which
people with assets must pay more towards their care be
lowered to $100,000.

Government
response

Associate Health Minister Casey Costello
said on Monday that governments had kicked the aged care can
down the road for too long.

She said the way aged care
services were funded was “outdated and does not recognise
the future investment required”.

“The current model is
siloed and doesn’t deliver a cohesive
system.”

Costello welcomed the “substantial” report,
and said the government would consider the recommendations
carefully before making any policy and funding
decisions.

“This is a significant issue which has a
real impact on peoples’ lives, personal and government
finances, the sector, and the wider health system. We need
to make the right decisions.”

The Ministry of Health
has been directed to work with other agencies to develop
advice for the government on the
recommendations.

© Scoop Media