Union proposes tax to fund universal aged care

The Health Services Union is calling for a Medicare-style levy to fund Australia’s aged care system.

The Health Services Union is calling for a Medicare-style levy to fund Australia’s aged care system.

However, a former aged care peak body CEO says wealthy aged care users should pay more rather than the taxpayer.

The proposal comes after last week’s hearing of the aged care royal commission briefly discussed non-government funded approaches to aged care including  Japan’s social insurance model.

The HSU has announced this week it is preparing a national campaign called Eldercare to address the aged care sector’s “severe, chronic and urgent” funding problem.

Gerard Hayes

It said aged care funding needs to increase by at least $5 billion.

Central to the campaign is a push for a universal, single-payer system for aged care, funded by a Medicare-style levy.

HSU secretary for NSW, ACT and Queensland Gerard Hayes said Australia needed a secure and sustainable funding source for aged care in the decades ahead.

“Providing a dignified level of care to an ageing population is going to cost more money,” Mr Hayes said.

“A universal aged care system, funded by a special levy deserves serious consideration.”

Paul Carberry

The HSU intends to make this proposal a central feature of the next federal election, he said.

Paul Carberry, who was CEO of aged care peak body Leading Age Services Australia South Australia from 2005 – 2016, agreed the sector was underfunded.

However, he called HSU’s solution misguided.

“If the solution to everything is a new tax, we won’t have an economy left that’s worth taxing.

“In terms of the effect on people’s living standards, levies and taxes disproportionately affect people on low incomes, like HSU members, because most of their money is spent on necessities,” Mr Carberry said.

A big part of the solution has to be requiring aged care clients with substantial property and financial assets to pay more for their care, he said.

“At the moment this doesn’t happen, and taxpayers bear too much of the burden,” Mr Carberry said.

He said aged care funding and regulatory mechanisms also needed to be simplified so more of the available money was spent on care rather than other activities.

Royal commission discusses insurance model

At last week’s royal commission hearing royal commissioner Tony Pagone asked a panel of industry representatives about alternatives to Australia’s model of aged care services largely funded by government.

He asked their view on Japan’s insurance model, which he described as a bucket of money that people are entitled to draw upon, similar to Australia’s superannuation guarantee fund.

Professor Woods (left) and Ian Yates at Monday’s hearing of the aged care royal commission.

COTA Australia chief executive Ian Yates said a discussion about social insurance was important and could happen at both the royal commission and government’s current retirement income review.

David Tune

It is about how you effectively finance needs in later life, which is what other overall retirement income system is designed to do, he said.

Aged Care Sector Committee Independent Chair David Tune agreed it was to important discuss but said a social insurance system would take time to mature in the same way it took the superannuation guarantee years.

A real issue is whether people are going to accumulate enough over their lifetime to be able to meet their needs, whether they are income, aged care or health needs, Mr Tune said.

“So you are probably talking … something like a 30, 40 year transition to get there.”

Robert Bonner, director of operations and strategy at the Australian Nursing & Midwifery Federation’s South Australian Branch, said the issue was whether it was a social insurance system building a pot of money for the whole community or an individual to access services.

Robert Bonner

He said the latter was at odds with some of the posited principles such as equity of access, and assessment based on need.

“We would argue that, yes, there is a need to explore some of these options in terms of system funding but not at the individualised level,” Mr Bonner said.

Economist Professor Mike Woods from the Centre of Health Economics at University of Technology Sydney supports having the conversation but said it needed to distinguish between insurance and savings.

“Savings gives you that personal entitlement, which is what the superannuation system is built on, whereas an insurance system is a pooled requirement and then people draw on it as they need, depending on their circumstances.”

He said Japan used a hybrid of these.

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8 thoughts on “Union proposes tax to fund universal aged care

  1. The other option for government to consider would be a National Insurance Scheme, that we have in place for disability – currently we have an aged care system based on a welfare model … and a disability services based on universal benefits for all. Very confusing for consumers to have two different systems.

    What do others think?

    Ralph Hampson
    A/Prof Uni of Melb

  2. Hi Ralph

    Unfortunately, the term “insurance” is misused and misunderstood.

    Traditionally, insurance means that you pay a premium to an insurance company and they take on a risk with respect to certain events occurring, e.g. your house burning down. If your house does burn down, they have to pay you the insured amount, but because a lot of other people paid them premiums, whose houses didn’t burn down, the insurance company still makes a profit.

    If, for example during the recent bush fires, a lot people’s houses burn down, the insurance company could lose money. That’s why it’s called “risk”; it’s a business.

    That’s got nothing to do with the NDIS, where, although the “I” stands for insurance, it’s not insurance at all. In this case the taxpayer takes on the risk that some people will need disability support, nobody pays a premium for this, and the government (taxpayers) covers the cost of this support according to the rules which government has laid down.

    Therefore, despite the different terminology, the NDIS and aged care are both government-funded services, which are paid funded in the same way, i.e. out of general government revenue.

    The only point I made in with respect to this, is that some aged care clients have the financial capacity to pay a lot more for their care than they are currently required to do, and if they did pay a greater amount, the system might be more sustainable for those who lack that capacity.

  3. Alas Paul, your thinking is pedantic. Insurance is the appropriate term in the following sense. As an approximation, we all pay taxes, we are all subject to the risk of aged care and so if part of our taxes go to subsidise aged care for those unfortunate to need aged care then that is insurance.
    In general insurance is when a group of people get together to pool risky outcomes that will affect only some of them.

  4. So, Ian, if we were to change the name to “Aged Care Insurance Scheme”. what problem have or solved with respect to its funding? Or am I being pedantic?

  5. Let us consider the Charter of Aged Care Rights and the Royal Commissions aspirational statements about reablement, etc and the social model/s of health care, aged care, NDIS, child care, etc. Having spent in excess of 40 years in health and aged care executive roles I have heard so much about reablement however so called. It fails to consider personal or consumer choice. A person must choose to be reabled. Will they choose reablement just because they may have a better quality of life? Should they be forced to reable? Should there be some other incentive to reable? Think of the number of diseases on the increase, for example diabetes. Do you change your lifestyle or just take a tablet or insulin? As a society we have understood the costs associated with this disease for years but has reablement been the solution? So who should pay? I currently have residents who for various reasons contribute only the DCF. At the other end of the scale I have residents who pay the DCF, a full RAD and the lifetime cap of MTCF. They each receive the same level of care. Some people are always less fortunate and others choose to be – back to the personal right to choose. Who pays is a conversation we all need to have. NDIS discriminates against older people. HCP discriminates against residential care recipients. Unfortunately the Royal Commission hasn’t come up with a solution. And yes, I’ve asked many questions with no answers provided but am very concerned about the direction the Royal Commission is taking.

  6. Ralph, I totally agree with what you have stated. The Aged care so called reforms should have come under Human rights as did the NDIS . Unfortunately I believe that reason that it didn”t reflects our society’s “ageist” attitudes. Nothing will change until our, and the government’s attitudes towards older people change.

  7. We are already paying $300.00 as copayment while someone on the NDIS is totally funded so we are already paying a tax your age should not determine the level of care you receive if you are profoundly disabled you should be fully funded depending on needs not age, I would say that both the NDIS and the proposed tax should be similar to Medicare and not a profit making vessel for private providers…

  8. The Unions propose a tax, for years some unions have been getting bigger than their britches.
    Yep, the proof is right here, these unions and their Super funds have gone to their heads. Here’s a thought why not put a tax on Unions that have Super funds and get their mates who can’t spell Labour to bring in this proposed tax, always sticking it to the little people, no wonder union membership is down.

    WAKE UP unions and Labour we the people require LESS taxing, and you wonder why you LOST the last Federal Election. It would be funny, if it wasn’t so serious!

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