A parliamentary select committee has heard a grim litany of complaints about an aged care sector that's being pushed to financial breaking point.
Submitter after submitter said the sector could barely make a go of looking after the frail elderly under current funding arrangements, despite a decade and a half of warnings from expert reports. And they said the future was looking even worse.
The average cost of Aged Residential Care (ARC) is $64,000 a year per person, according to the industry body, the New Zealand Aged Care Association (NZACA). In the 2022-23 year, the Government, via Te Whatu Ora, paid $1.4 billion in ARC costs, while residents paid $1 billion via means and asset testing, including superannuation deductions, and deductions from the value of their home. The costs are certain to grow with swelling numbers of older people.
The matter has come to a head once again after National’s coalition agreement with NZ First called for a select committee inquiry into funding of aged care.
That inquiry, by the Health Select Committee, is also looking at asset testing of people with neurological cognitive disorders, who are the most expensive patients in the system.
Asset testing is aimed to transfer some of the cost of ARC from the State to individuals, by eating into family assets including the home, down to a threshold of $284,636, or $155,873 excluding the home if a partner or dependent child lives there.
The setting of these levels has produced angry outbursts from people who see their inheritance crumbling away. But others argued that allowing people to keep more of their inheritance would increase the burden on the public purse still further.
The possibility of reducing thresholds to ease the pressure on government budgets is expected to be considered by the committee, but there is no certainty a recommendation like this will be made.
Most submitters to the inquiry tip toed around the matter.
The listed company Ryman Healthcare lamented the economics of the system generally, saying; “the existing level of funding is insufficient to maintain or modernise current facilities, and there is inadequate return to build new beds. (Increased funding) could come from individuals paying more into their level of care, or a reduction in asset thresholds, or an increase in government funding.”
Another retirement company, Arvida, called for a review of funding so aged residential care would be viable, but chose not to comment on asset thresholds.
Bupa also hedged its bets, saying “consideration should be given to setting appropriate and sustainable asset thresholds that reflect the true cost of care without unduly penalising individuals, families and businesses.”
Dementia NZ said asset testing thresholds were not its area of expertise, but appeared to open the door to a possible lowering of the level.
“Our view is that any decisions pertaining to asset thresholds must ensure that quality, evidence-based services are accessible to those who are unable to pay, and that there is choice for those receiving services.
Age Concern actually called for an increase in the threshold to allow more money to be made available for people to support themselves in their old age.
More than 80 individuals and organisations submitted to the select committee. Many of them gave graphic warnings about how hard it is to make ends meet right now.
One of them was the century-old home help body, Aged Residential Care, which warned “primary and secondary health services would be under insurmountable pressure if homebased providers are not sustainably funded.”
More dramatic testimony came from CHT Healthcare Trust, a 60-year-old not for profit organisation with 21 care homes.
“It costs $21 million to build a 60-bed care home,” CHT wrote in its submission.
“Based on estimated future cashflows, on the day it opens a care home would be valued at around $12 million. Even a not for profit cannot sustainably manage that level of write off."
“We don’t have retirement villages and we simply cannot build the new care homes and be financially responsible.”
'The funding model is broken and needs to be replaced'
Another submission came from Foxton’s Lonsdale Care Centres, which does palliative care or 24-hour supervision, and had a similar point to make.
“The healthcare system is not set up for the provision of quality care at any level….there have been repeated reports since 2010 that have warned successive governments that the sector is underfunded and that a crisis is approaching…..The crisis has arrived. The funding model is broken and needs to be replaced.”
The Lonsdale submission contained a bleak forecast regarding the future of aged care in rural areas.
“Premium priced beds continue to be built for people that have the financial means to pay. Where people rely on government funding, facilities are shrinking and will ultimately close. Therefore, care will be provided for those who have the means to pay. It is a political decision whether this is acceptable.”
Yet another report is currently being written on this subject. It is a comprehensive review of all aspects of funding ARC by Te Whatu Ora, which is expected to go to Cabinet next month.
A question has been raised over its robustness by the NZACA, whose chief executive Tracey Martin told the select committee there had been inadequate consultation in writing this report.
“Right now, aged care is being redesigned behind closed doors,” she said.
“We and our colleagues representing palliative care, dementia, alzheimers and gerontologists, have been excluded from designing a new delivery and funding system. Without on-the-ground experts, this will result in a short-sighted and short-term fix instead of the affordable and sustainable system change we need.”
But Te Whatu Ora’s director of Ageing Well, Andy Inder, denies this allegation of exclusion.
“The Aged Care Association was one of the 2000 people and organisations we received over 10,000 pieces of feedback from during our initial engagement during May and June this year,” he says.
“That engagement included eight regional workshops, online webinars, a public survey and various meetings and workshops.”
Another argument from Martin is Te Whatu Ora is mainly interested in clearing sick old people out of hospital, to overcome “bed blocking” of patients from other demographics. Inder denies that charge.
Meanwhile, Martin went on to say that a select committee hearing was not equal to the task of dealing with such a huge problem as funding aged care.
“We ask the committee to consider requesting the Minister of Health to hit pause on the aged care sector redesign,” she said.
“We ask the committee to recommend with some force that a ministerial task force or multi ministerial forum that includes representatives of the peak bodies and stakeholders be created.”
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