Expenditure on aged care services

Total aged care expenditure

Aged care services are a vital resource for older Australians, including the growing number of people with dementia. There are a number of government-funded aged care services available to provide care and assistance to those in need. These include: home-based care and support, short-term care and respite, and residential aged care services. In 2018–19, $18.6 billion was spent on aged care services and $2.5 billion of this was directly for dementia.

Aged care accounted for most (82%) of the total direct health and aged care system expenditure on dementia. Aged care expenditure for dementia included:

  • $1.7 billion for people with dementia in permanent residential aged care facilities
  • $397 million for people with dementia receiving Home Care Packages – services that provide home-based care to people with greater or more complex care needs living in the community
  • almost $176 million for people with dementia under the Commonwealth Home Support Programme – a program that provides entry level care for people who require a low level of support to remain living independently
  • $133 million for community-based and residential respite care services (Figure 14.2).

Other aged care related funding for people with dementia included: over $31 million for the Transition Care Program – which provides short-term care for up to 12 weeks for people who have been discharged from hospital and over $21 million for providing aged care assessments for people who are eligible for government-funded aged care services in order to assign appropriate services to suit that person’s needs. Almost $22 million was also provided for people with dementia receiving culturally appropriate aged care services through the National Aboriginal and Torres Strait Islander Flexible Aged Care Program.

A further $23 million was for aged care services for Veteran Gold Card or White Card holders with dementia. This included $8.9 million for the Department of Veteran Affairs (DVA) Community Nursing program – which provides a range of medical and personal care services to DVA clients to support them living in their own homes and $14 million for the Veterans’ Home Care Program, which provides practical care for DVA clients who require minimal help to remain living independently.

Figure 14.2: Estimated Australian Government expenditure on aged care programs that was attributable to dementia in 2018–19

Figure 14.2 is a bar graph that shows Australian Government expenditure on different aged care programs in 2018–19 that was directly attributable to dementia. The largest area of spending was residential aged care services (with spending of $1.7 billion) followed by Home Care Packages ($397 million), the Commonwealth Home Support Programme ($176 million) and community-based and residential respite care services ($133 million).

The proportion of each programs’ annual expenditure that was directly for dementia ranged from 7.9% of the Commonwealth Home Support Programme (excluding respite care) to 49% of spending on the National Aboriginal and Torres Strait Islander Flexible Aged Care Program (Table S14.2).

It is important to note that the dementia expenditure estimates for Home Care Packages, Commonwealth Home Support Programme and the DVA Home Care Program are based on the length of time a person with dementia was receiving the Dementia and Cognition Supplement in each of the Home Care Package levels. This supplement is available to people with moderate or severe cognitive impairment to offset the additional costs associated with their care. However, as not every person with dementia receives this supplement, the expenditure estimates presented here will be an underestimate of the true cost.

Refer to Community-based aged care services for more information on the Dementia and Cognition Supplement and the provision of aged care services for people with dementia.

Residential aged care

Residential aged care services are available for older Australians who are approved for entry following an assessment by an Aged Care Assessment Team. The Australian Government provides payments to approved aged care providers to cover care-associated costs for each permanent resident. Refer to Box 14.2 for more information on residential aged care funding.

In 2018–19, the total cost of care for permanent residents with dementia was almost $6.8 billion. When the costs associated with other co-existing conditions in residents with dementia are excluded, the total cost of care directly attributable to dementia was just under $1.7 billion (Figure 14.3).

Women with dementia accounted for 68% or $1.1 billion of the residential aged care expenditure directly attributable to dementia. Expenditure was highest for women aged 90–94 ($306.4 million), closely followed by women aged 85–89 ($302.1 million). By contrast, expenditure was highest for men aged 85–89 ($130.2 million), followed by men aged 80–84 ($114.6 million). As women tend to live longer than men, women account for both a greater proportion of people with dementia in Australia and a greater number of permanent residents in aged care facilities.

The average yearly cost that was attributed to dementia per resident was approximately $10,500 in 2018–19. The average cost was higher for women ($11,000 per resident) than men ($9,500) overall. This was also the case in each age group, except for those aged 75–79, where average expenditure for men was slightly higher ($10,000 compared with $9,900 for women).

Figure 14.3: Estimated Australian Government expenditure on permanent residents of aged care facilities in 2018–19 that was directly attributable to dementia: (a) by sex and (b) by age and sex

Figure 14.3 is two bar graphs that shows estimated Australian Government expenditure on residents of aged care facilities in 2018–19 that was directly attributable to dementia, both in terms of total expenditure and average cost per resident. The first graph disaggregates this expenditure by sex, and shows that females accounted for approximately two thirds of expenditure. Average cost per resident was also slightly higher than males. The second graph disaggregates this expenditure by age and sex and shows that the difference in both total expenditure and average cost per resident between sexes, was largely due to higher expenditure attributable to females aged 80 years and over.

Box 14.2: Residential aged care funding and estimated residential aged care expenditure for dementia

Residential aged care is primarily available to older Australians who can no longer live at home, and includes accommodation in a 24-hour staffed facility along with health and nursing services (Department of Health 2021). For approved applicants, places in residential aged care facilities are subsidised by the Australian Government, and the Aged Care Funding Instrument (ACFI) is used to allocate government funding to aged care providers based on the day-to-day needs of the residents in their care.

Additional supplements may also be provided for residents with specific care needs, such as people who require oxygen to assist with breathing or need to be fed through a tube (enteral feeding), as well as veterans and people who are experiencing homelessness. The basic subsidy is means tested, and may be reduced for an individual for a number of reasons, including if an individual’s income is above a set threshold as they then should be able to afford to contribute to payment of their own care (Department of Health 2020). More information on the payments for residential aged care is found at: My Aged Care.

Data collected though the ACFI, along with related administrative data maintained by the Department of Health were used to estimate Australian Government expenditure for permanent residents with dementia in residential aged care facilities. Note that these expenditure estimates relate only to permanent residents of facilities which are subsidised by the Australian Government and who received an ACFI assessment and had dementia recorded on their assessment. A snapshot of people in permanent residential care on 30 June 2019 showed that ACFI data capture almost all people in permanent residential aged care subsidised by the Australian Government (99.7%) (AIHW 2020). The ACFI data excludes people with dementia who live in aged care homes which are not subsided by the Australian Government.

Therefore, the residential aged care expenditure estimates attributable to dementia in this report are a minimum estimate of government expenditure on residential aged care services for dementia.

Home-based aged care

The Australian Government provides 2 main home-based service programs – the Commonwealth Home Support Programme and the Home Care Packages Program – available for eligible older Australians so that they can continue to live in their own home.

The Home Care Packages Program had more expenditure and a greater proportion of its total funding directly on dementia ($397 million and 16%) compared with the Commonwealth Home Support Programme ($176 million and 7.9%) because Home Care Packages are designed for more complex care needs (including dementia).

There are 4 levels of Home Care Packages with different funding amounts that cover basic support needs through to high care needs. Of the $397 million spent on people with dementia receiving Home Care Packages, $258 million or 65% was for Level 4 packages, which are designed for people with high care needs, and who require the most extensive home-based aged care services (Figure 14.4).

Figure 14.4: Australian Government expenditure for recipients of Home Care Packages with dementia, by Home Care Package level, 2018–19

Figure 14.4 is a bar graph that shows estimated Australian Government expenditure on recipients of Home Care Packages with dementia in 2018–19, by Home Care Package level. It shows that spending is higher for higher levels of Home Care Packages, with approximately two-thirds (nearly $258 million) of the total expenditure attributable to recipients of Level 4 packages.