The release this week of a Productivity Commission report which lays out a blueprint for ensuring the aged care system can cope with the needs and wants of the baby boomers caused the Prime Minister to reflect on her high school job.
She worked in a home for women, a large proportion of whom were in good health and still driving.
“Many of them had gone from their parental home to their marital home and then on the loss of their husband moved straight into residential aged care and spent 20 years of their life in residential aged care,” Gillard says.
“When they first went in they were still physically very hale and hardy and able to do things like driving.
“Now no one in today’s society would say to themselves that with 20 years of life in front of them and able to do things like drive, that they would move into residential aged care.
“Those attitudes have changed across my lifetime. Attitudes are going to keep changing and keep evolving where people will want to be more independent with more choices.”
Gillard is correct when she says most older people now want to remain in their own home - or perhaps downsize to a smaller home or retirement village - before considering moving into a residential aged-care facility if they require high levels of support.
The Productivity Commission estimates that the median length of time older Australians spent in residential aged care between 1997 and 2009 was just 1.2 years for males and 2.2 years for females.
Obviously, many people live in aged care homes for several years or decades but the statistics highlight the fact that most older people - including those with age-related physical frailties - remain at home.
But as they age, people who stay at home become increasingly likely to require assistance which informal carers such as family members or friends cannot provide. Fortunately, some publicly funded services are available to help keep older people at home.
At birth, there is a 62per cent risk that females and 42per cent risk that males will require aged care in life.
About one million Australians received aged care services and this will increase to 3.5 million by 2050.
When it becomes clear to an older person or a loved one that they may need extra support a professional assessment can be carried out.
Government-funded Aged Care Assessment Teams, comprised of health care professionals, determine what levels of care older people need.
The teams can approve transition care, which assists older people to regain their independence and confidence after a hospital stay. Transition care can run for up to three months and be provided in a residential care facility or in the person’s own home.
Home and community care services receive the majority of their funding from the Federal Government and are provided by local governments and by charitable, community and commercial organisations.
The services provide domestic assistance such as help with cleaning, cooking, washing and ironing and personal care such as bathing and dressing.
They can also provide community nursing, meals on wheels, respite care and transport services.
Fees charged can vary depending on a person’s ability to pay.
Government-subsidised community aged care and extended aged care at home packages provide individually planned and coordinated care packages to help frail older people remain in their own homes.
Flexible care packages can include personal care, social support, home help, meal preparation and transport assistance.
For carers, a national respite care program can provide part or full day and overnight respite programs.
The downsides of the community care system include delays in care assessment, limited availability of care packages and inflexibility. When a person has to move from one care package to another they may be forced to give up a service provider or personal carer that they were happy with.
The Productivity Commission says people should be able to choose whether to receive care in their own home and create an individually tailored “bundle” of services from different providers which best meet their needs.
And to help older people and their families cut through the complex systems needed to access care services, an Australian Seniors Gateway Agency would be created to provide information and assessment and referral services.
Despite the natural desire to remain at home, there can come a time when residential aged care is the best option. The Aged Care Assessment teams are responsible for assessing what level of residential care would be required.
While there are high vacancy rates in the ACT residential aged care sector, families sometimes struggle to find a facility they are happy with will meet a loved one’s needs.
Residential placements are divided into low (hostel) care and high (nursing home) care.
Current demand is overwhelmingly for high care places - last year about 70per cent of aged care residents received high-level care.
The rapid ageing of the population might suggest that residential aged care may be a financially profitable business to get into, but many private and community operators disagree.
They complain that current levels of government regulation are hampering much-needed investment.
This is bad news for many baby boomers who will expect a higher level of aged care accommodation than their parents might have accepted.
The problem largely comes down to financing.
Residents of aged care facilities can be charged a maximum of $40.25 per day in basic fees. Permanent residents in low-care facilities can be charged a further daily accommodation fee or bond.
Residents who cannot afford to pay the full cost of their accommodation can receive government subsidies worth a maximum of about $11,000 per year.
Bonds effectively act as an interest-free loan to providers, which can deduct up to $318 per month and earn interest from the bond.
The bond is refunded when a resident leaves the aged care home or dies.
Aged Care Minister Mark Butler says the bond system has forced many elderly people to conduct “fire sales” of their family homes to gain a place quickly in residential care.
Residential aged care providers have long sought the right to charge high-care residents bonds.
They also complain that caps on fees for high-care places other than those which include additional services prevents them from being able to invest in the level of accommodation many potential residents want.
The Productivity Commission agrees that fees should be deregulated.
An estimated 25,000 “phantom” aged care beds have been created over the past decade.
This means that successive federal governments have issued bed licences which have not been used, or which have been surrendered due to a lack of financing options.
In order to guarantee the viability of the industry and improve services, the Productivity Commission argues that those future aged care residents who can afford to pay more should do do so.
While most older people survive on low fixed incomes, many have considerable wealth locked away in their most important financial asset: the family home.
The commission points out that wealth projections show by 2030 older Australians will own about 47per cent of total household wealth, but make up only about 19per cent of the population.
“This suggests that asking younger Australians to pay higher taxes to fund aged aged care, while also being required to save more to fund their own retirement, is inequitable.”
The commission proposes a new fee structure that would protect people from having to sell their family homes to pay for care.
Aged care residents would have to pay up to 25per cent of their care costs, based on a means test, but this would be capped at a lifetime maximum of $60,000.
They would be responsible for paying their own accommodation costs through a daily fee or voluntary bond. Places would have to be set aside for people with limited financial means. To help fund their aged care services, homeowners could take out a form of reverse mortgage on part of their home through a Government Aged Care Home Credit Scheme.
Older people who chose to sell their homes would be able to deposit the proceeds in a special account which would not be considered in means testing for the aged pension. The money would not have to be spent exclusively on aged care.
The Productivity Commission wants to end the distinction between high and low-care residential places, scrap caps on the number of bed licences and create incentives for services to meet diverse needs: such as those of people from diverse cultural backgrounds, indigenous Australians, gays and lesbians and the homeless.
It also says that higher rates of pay will be needed to recruit sufficient staff to work in the expanding aged care sector.
The proposed reforms are largely supported by the aged care industry although some groups have reservations about making accommodation bonds voluntary. The changes would take about five years to implement.
Gillard has promised to consult the community before deciding what changes to make to the aged care system, but wants to begin the reforms before the next election.
Many community aged care groups and unions who opposed the extension of user-pays principles during the Howard government now accept them. They say the sector needs more investment, but doubt the public would want to pay higher taxes to provide the money.
Supporters of change fear that comprehensive reform will not occur unless it is supported by both the Government and the Opposition.
And without substantial change to ensure the aged care sector can grow, many Australians will be left without the care they need.
Peter Jean is Health Reporter
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