July 27 2009
Simon Lauder (ABC)

The Health and Hospital Commission says the number of aged care places will need to double in the next two decades.

It is recommending nursing homes be allowed to collect bonds from a wider range of residents to pay for them. The industry has welcomed the plan but a group representing pensioners and superannuants says it would be a step away from public funding of the system.

Aged-care bonds are paid by residents, on top of their regular fees. The bond is a lump sum which the provider can take monthly deductions from for up to five years to help pay for services and the upkeep of facilities. The balance of the bond is refunded to the resident or the resident's estate when they leave care.

At the moment providers can only charge a bond for low care places. But the Health and Hospital Commission recommends providers be allowed to charge bonds to high care residents. It is just one of several recommendations the commission says would open the way for more choice in the industry.

But the policy coordinator with Combined Pensioners and Superannuants Association, Charmaine Crowe, says if bonds are introduced for residents in high care it will entrench a user pays system.

"Aged care is an essential service just as health care is, aged care is a form of health care and it should not be based on a user pays system," Ms Crowe said. "The subsidies that the Government provides, aged-care providers, they need to be adjusted accordingly so that aged-care providers receive enough funding to provide quality care so that all Australians can access aged-care services when needs be." Private aged-care providers have backed the proposed change, saying the sector has withdrawn from building expensive new high care facilities and bonds would help pay for them.

Jim Toohey is the head of care provider Tricare Limited. "The cost of constructing a purpose-built modern high care bed that consumers want to stay in, a good attractive facility where they can stay for the rest of their lives is between $150,000 and $200,000 per bed and quite simply the current funding system which relies on taxpayers just can't meet that cost," Mr Toohey said.

But Charmaine Crowe says the only thing many people have to offer as a bond is the family home. "So what we would see is a case or cases of people having to sell the home, despite them being in quite, perhaps having quite a serious health condition because they're going into high care but because they need that bond, they would probably sell the home to come up with the money to pay the bond," Ms Crowe said.

"The issue is that generally [when people] go into a high care place, they're not in there for that long a period of time so we question the amount of revenue that a provider would be able to receive through the charging of bonds for high care."

"Really this comes down to the adequacy of government subsidies and it really reinforces the need for the government to address that issue as a matter or urgency."

The idea that aged-care bonds require people to sell their homes is rejected by Warren Hogan. He is a professor in the School of Finance and Economics at Sydney's University of Technology, and he conducted a review of aged care for the Howard government.

"Accommodation bonds that are collected ensure the maximum funding from people who can afford to make a contribution and in this way of course the aged-care facilities - whether they are for profit or not for profit - can therefore build facilities which include those which cater to the concessional people who are those who can't pay bonds," Professor Hogan said. "The truth is that the large bonds have proved to be the basis on which the funding for development could incorporate provisions for both the people who can provide bonds and those who can't."

The chief executive of the Council On The Ageing, Ian Yates, says he welcomes the commission's recommendation if it achieves the stated goal of giving people more choice in the aged-care sector.

"Bonds would be one means by which older people could pay for their accommodation if they need supportive care. "Older people tell us that bonds are one option of funding. That they want a range of financing options., and our other criteria is that no-one should be excluded from any form of aged care for lack of capacity to pay."