An independent group appointed by the Government has recommended that older New Zealanders be asked to spend their savings down to $100,000 before the state picks up the bill for residential care, a threshold well below the roughly $300,000 that applies now.
The recommendation is one of 40 in a 186-page report released on Monday by the Aged Care Ministerial Advisory Group, chaired by former health minister David Cunliffe. The report is called A place to grow old, securing the future of aged care, and it argues that the system New Zealand has now was built for a different era and cannot be patched up with extra money alone.
Under the rules that took effect on 1 July, a single person aged 65 or over can hold assets of up to $300,811 before the Residential Care Subsidy is means tested away, according to Work and Income. A couple with one partner still living at home can choose a limit of $164,731 that leaves the family home and car out of the calculation, or the higher figure that counts them in. Those thresholds move each year with inflation. Dropping the limit to $100,000 would pull a large number of households into paying the full cost of care out of their own assets.
The advisory group says the arithmetic leaves the country little choice. There are about 950,000 people aged 65 and over in New Zealand and that is expected to reach about 1.3 million by 2040. In 1996 roughly one in ten New Zealanders was over 65. By the 2050s it will be one in four, and people are arriving in residential care older and with more complicated needs than they used to. The Government already spends more than $2.5 billion a year on aged care, counting both in-home support and aged residential care.
The group tested three futures. Doing nothing produces a shortage of more than 9000 residential care beds by 2037/38, pushing older people who cannot get a bed into hospitals instead and adding close to $600 million a year to the Government’s costs, with the total bill reaching $4.4 billion. Simply funding the existing model more generously buys some breathing room and then, in the group’s words, “rapidly becomes unaffordable”. Building an extra 10,000 beds alone would cost $2.6 billion, and total aged care spending under that path would climb past $9.3 billion by 2047/48, with the share paid privately by residents rising 135 percent to $3.3 billion. The third path, structural reform, was modelled at around $3.7 billion in 2037/38.
“The only real choice is between a hard set of changes made deliberately now, or a more painful set of changes forced on the country later,” the report says.
Cunliffe said in a statement released with the report that the current system is “fragmented, hard to access, and underfunded”. “The cracks are starting to show in bed shortages, some services closing their doors, and some carers unable to cope. As our population ages, those pressures will only multiply, and costs are expected to nearly double in the next 20 years.” He said the group’s modelling suggests demand for beds will start outrunning supply in some parts of the country within five years, which matters because a new bed takes three to five years to build.
Much of the package is aimed at keeping people out of residential care in the first place, by scaling up help delivered in people’s own homes, simplifying the assessment process and knitting home care, residential care, end of life care and the wider health system into one pathway rather than several. The group also wants immediate price rises for providers, a 6 percent lift for in-home care next year costing about $30 million, and a 7.1 percent lift in per-bed prices for residential care. It estimates the full programme would avoid just over $830 million a year in unnecessary cost growth by 2037/38.
“Those who can contribute towards the costs of their own care should do so, fairly and transparently, so the system is still there for our children and grandchildren when their time comes,” Cunliffe said.
Associate Health Minister Casey Costello, who is also Minister for Seniors, said governments had kicked the aged care can down the road for too long and that the way services are funded is “outdated and does not recognise the future investment required”. She has not committed to any of it. Speaking to RNZ, she acknowledged “there’s no denying there’s a significant price tag attached” and would not be drawn on figures until the Ministry of Health reports back with advice. “There is significant investment needed, but if we don’t invest in the system, everyone ends up in hospital or we end up with really poor health outcomes, further burdening the health system.”
Aged Care Association head Tracey Martin welcomed the shift from describing the problem to proposing fixes. “The system itself is fragmented and disconnected, and it’s not just money that is sometimes falling through those cracks, it’s human beings,” she told RNZ. Martin was less sure about one idea, charging different daily rates for newer and older rooms, saying on first look she worried it would hurt small operators, charities and not-for-profits because they hold the oldest buildings. She urged the Government not to rush. “Let’s not do anything rash.”
Aged Care Commissioner Erin James backed the direction while warning that money is not the only test. “It is critical that we are designing a system that is not only focused on funding adequacy, but also on the conditions required for safe, rights-based, person-centred care,” she said in a statement. She supports more care at home, but notes it is delivered by a largely unregulated workforce inside private houses where nobody else is watching, and she welcomed the recommendation to extend the Ngā Paerewa health and disability services standards to in-home providers.
The Public Service Association, which represents home support workers, said the reforms will not work without fixing what those workers are paid. National secretary Fleur Fitzsimons pointed out that pay and conditions were left outside the review’s terms of reference even though the report itself concedes an integrated system is not achievable “without a sustainable and capable workforce to deliver it”. “You can’t have it both ways,” she said, calling for the pay equity rate for home support workers to be restored and for guaranteed shifts instead of piecemeal rostering.
The Ministry of Health has been told to work with other agencies on advice for ministers. With an election due this year, none of the harder recommendations, and particularly the asset threshold, is likely to be settled quickly.
Would you accept a lower asset limit to keep aged care funded, or should the cost stay with the taxpayer? Tell us what you think in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
Leave a Reply