Fund the future
Medicare levy a potential fix for sector ’ s financial woes .
By Elise Hartevelt
A raised Medicare levy could help address mounting deficits facing aged care providers , industry experts have said .
Quarterly StewartBrown reports continue to show the aged care sector is struggling financially , with 67 per cent of providers reportedly losing money .
The Royal Commission 2021 report said the government can allow for a more consistent cash flow into the aged care sector if it increased the Medicare levy .
Yet , aged care advocate Paul Sadler said the Labor ’ s recent budget left major longterm financing issues unresolved .
“ We need to be looking at a Medicarestyle aged care levy to solve the industry ’ s unsustainability ,” Sadler said .
“ Unfortunately , the Morrison government rejected this and Labor ’ s recent budget also doesn ’ t support funding for it .
“ So , I ’ m hoping their next budget in May will show some provision for that .”
Currently , 2 per cent of the money from tax-paying Australians is funnelled towards Medicare .
In the Royal Commission ’ s final report , it was estimated that reform to the aged care sector would need funding of up to $ 2 billion over four years , depending on the ‘ ambition of the reform .’
To meet the costs , it suggested the Medicare levy should be increased between 0.1 to 0.65 per cent , costing taxpayers up to $ 610 a year .
UNSW Sydney ’ s Professor Michael Sherris said a new system needs to be in place soon if the Albanese government wants to meet the ageing population ’ s growing costs .
“ We need to put in place a system that will generate more funding from individuals ,” he said .
“ The government needs to find a different way to fund aged care reform if they want to have the resources because it ’ s currently unsustainable .
“ People paying a levy during their working life would help meet the costs of age care .”
It ’ s projected that older people will make up to 23 per cent of the Australian population by 2066 .
People also living longer – Australians aged 65 in 2020 are expected to live up to another 23 years , with an expected death of around 88 years .
Still , most people will need aged care services around age 65 due to the rising
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It ’ s necessary to pre-fund the system now .
prevalence of health conditions such as dementia and heart diseases .
The two main ways the government can generate more money to fund aged care are by raising taxes or increasing the contributions of individuals using its services , according to Sherris .
“ Individuals who are retiring have more resources from their superannuation over the future years ,” he said . “ So , through private insurance arrangements or through their contributions , more money has to go into aged care to prepare for the upcoming decades .” Whether we can expect a tax increase soon depends on the government ’ s response to population trends in the future , Sherris said . “ The government ’ s facing increasing costs of a rapidly ageing population that ’ ll require more [ medical ] assistance , but there ’ s no doubt these trends will impact the cost of the medical and aged care system .
“ Simply raising taxes in the future is not going to cut it – it ’ s necessary to somehow pre-fund the system now , from an intergenerational perspective as well .
“ It ’ s probably not going to happen during their first term of office , but they ’ re certainly aware .” ■ agedcareinsite . com . au 27