Aged Care Keating V Robinson model

With COVID-19 turning the world upside down in 2020, all eyes have been cast on how our politicians manage the new situation. With a very high number of Australian COVID-19 infections and deaths being in the aged care sector – and the soon due report of the Royal Commission into Aged Care (established in 2018), has thrown the spotlight on the question of how Australian can take proper care of its elderly.

Weighing into the debate, former Prime Minister Paul Keating has proposed a HECS-style loan plan aimed at covering home care costs for elderly Australians.

Under the Keating plan the Federal Government would lend money to elderly people to fund their care. The loan will be paid back after their death via their estate.

Giving evidence to the Royal Commission into Aged Care Quality and Safety, Paul Keating said a Commonwealth-run post-paid system could reduce wait times for home care packages and ease the financial burden on families.

“The Commonwealth could advance as loans to every aged Australian so much as to meet their needs in support services to stay at home or alternatively in care accommodation,” Mr Keating said.

This HECS-type model to fund aged care completely misses the point, according to public finance expert, Dr Marc Robinson.  

Dr Robinson addresses the aged care challenge, and what is needed to tackle it, in his just-published book Bigger Government: The Future of Government Expenditure in Advanced Economies.

Dr Robinson said that the biggest problem facing aged care is the minority of elderly people who end up needing particularly long periods of expensive residential care because they suffer from dementia or other very severe disabilities.

“Everyone should be protected against this risk through social insurance, which would pay for aged care costs above a certain threshold. That way, those who end up being part of this unlucky minority would be protected from the huge financial burden of care.

“Everybody should pay a premium – in the form of a supplement to the Medicare levy – in order to pay for this insurance,” he said.

Dr Robinson proposes an Aged Care insurance, either by the government or by private insurance companies.

“However, international experience shows that, for such insurance to work, it has to be compulsory for everyone.

“And if insurance was provided by private insurers, it would have to operate under a system with a standard policy and premiums regulated by the government”, Dr Robinson added.

Although Dr Robinson prefers the government run insurance for Aged Care, as above, he however also, proposes government control mechanisms for private sector operators.

We cannot however, ignore the greed of private sector and the collusion of modern day politicians in compromising the well intention-ed ‘public control’ of privatized public functions.

The idea that the policy of laissez-faire is a panacea for all economic and budget problems, for governments all over the world is questionable, particularly, in light of private sector managed Aged Care disaster.

Talking to Bharat Times, Dr Robinson vouched for a government-run insurance – probably financed by increasing the Medicare levy. This is like super, where Australia quite correctly compels people to save for their old age”.

He completely agreed with me in my rejection of the laissez-faire idea.

Although Dr Robinson did not intend to comment on for-profit aged care centers, he accepted my thesis that it should be government and not private sector taking care of our elderly.

“I am perfectly perfectly prepared to accept that you may be right on this” Dr Robinson concluded.

The government will have to come up with a solution which is future proof and does not land our elderly in the hands of vultures.

For that we need to see the difference between the Keating model and the Robinson model. It is a no brainer – while the Robinson model is founded on sound economics and proven on the lines of Super’s functionality; the Keating model has odour of politics to it.

The only reason in my mind why Paul Keating, who in 1992 himself delivered Super for all Australians – would not propose a supplementary levy like Dr Robinson – is to not trespass the ‘no go’ area for politicians of proposing any new levy or tax.

I believe the Keating proposal will turn out to be cruel and predatory for many low income Australians once they are at the mercy of private providers in the twilight years of their lives.

Hence, daunting though it may sound, it is up to Scott Morrison and Josh Frydenberg to show courage and fix the sickeningly dreadful Aged Care sector, so that our elderly can live and die in peace.

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