‘Great news’: Labor’s new aged care funding is a ‘very welcomed move’

Key Concepts

• Clinical Care Funding: Government transition of essential home-care services (e.g., showering assistance) to fully funded clinical care.
• AAT (Administrative Appeals Tribunal): An independent body for reviewing government decisions regarding aged care assessments.
• GST Expansion: The reported application of Goods and Services Tax to optional aged care living fees.
• Private Health Insurance (PHI) Rebate: A government subsidy for PHI premiums, currently being restructured for Australians over 65 and 70.
• Cost of Living Crisis: The economic pressure on older Australians, particularly the one in four over age 50 living in poverty.

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1. Aged Care Service Funding and "Clinical Care"

The government has implemented a significant policy shift by reclassifying essential home-care services—specifically personal hygiene support like showering—as "clinical care."

• Impact: Previously, some elderly individuals were charged up to $50 per hour for these services. Under the new framework, these are now fully funded by the government, removing a major financial barrier for those with deteriorating health.
• Perspective: Corey Erlam (COTA) describes this as a "welcome move" but notes that it is part of a "mixed bag" of recent policy announcements.

2. Assessment and Appeals Framework

Navigating the aged care system is complex, particularly for the elderly and their families. Erlam outlined the formal process for challenging an unsatisfactory assessment:

1. Initial Review: Contact the original assessor and request a reconsideration through their supervisor.
2. Independent Review: Escalate the matter to the relevant government department.
3. AAT Appeal: Under the new act (effective November 1), certain government decisions can now be appealed to the Administrative Appeals Tribunal (AAT).

• Challenge: Erlam acknowledges that the system is currently experiencing "teething problems" as stakeholders adjust to the new legislative framework.

3. GST on Aged Care Fees

A recent report in The Australian revealed that the government has quietly expanded the GST to cover "optional aged care living fees."

• Financial Impact: The move is estimated to raise approximately $250 million annually.
• Criticism: COTA highlighted that there was no public consultation regarding this change. Given that 25% of Australians over 50 live in poverty, a 10% increase in costs for these services poses a significant financial threat to vulnerable seniors.

4. Restructuring of Private Health Insurance (PHI) Rebates

The government is reducing the additional PHI rebates previously granted to older Australians.

• The Change:
  • Current Structure: A base rate of ~24%, plus an extra 4% for those aged 65–69, and an extra 8% for those over 70.
  • New Structure: The age-based "extras" are being removed, meaning all age groups will receive the same base rebate.
• Financial Impact: Estimates suggest an average cost increase of approximately $1 per day per person.
• Behavioral Consequences: While the government predicts only a 0.4% (44,000 people) drop in PHI coverage, COTA warns of an "untold side": many seniors will retain their insurance as a "safety net" for emergencies (e.g., broken hips) but will be unable to afford the co-payments required to utilize the services for day-to-day health needs.

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Synthesis and Conclusion

The current landscape for older Australians is characterized by a tension between improved access to essential clinical care and increased financial strain due to tax changes and reduced insurance subsidies. While the government has successfully removed costs for critical home-care services, the lack of consultation on GST expansion and the reduction of PHI rebates are creating anxiety among the elderly population. The primary takeaway is that while the "bones" of the new administrative system (such as AAT appeals) are positive, the cumulative effect of these financial policy changes during a cost-of-living crisis may force many seniors to reduce their engagement with the healthcare system despite maintaining their insurance policies.