Report reveals inadequate access to aged care services risks overloading public health system

A NZIER report released today paints a grim picture of the future for the increasing proportion of New Zealanders who will need to access aged residential care services.

The report, “Assessing the equity issues facing aged residential care over the coming decade”, commissioned by Aged Care Matters, highlights how government underfunding of the country’s aged care system will make it more difficult for older New Zealanders without financial means to access aged care services.

Aged Care Matters, a movement of members of the New Zealand Aged Care Association to escalate a national dialogue on the crisis in the sector, commissioned the report following a lack of provision in Budget 2022 for aged care despite chronic government underfunding.

The NZIER report says that while it is difficult to accurately identify government expenditure on aged care, government spending in New Zealand appears to be low compared to the other countries in the Organisation for Economic Co-operation and Development (OECD).

New Zealand’s model for the government funding of aged residential care has not been revised since 2000.

NZIER found that New Zealand ranks near the top of international comparisons with respect to the number of people in aged residential care, with 14.6% of the population aged 80+ in aged residential care in 2019. Using a similar measure to New Zealand, Australia has about 13.9% of the 80+ population in aged residential care.

New Zealanders often finance aged residential care by selling their home. The report says that declining home ownership rates will reduce this key pathway to accessing quality aged care, which in turn will exacerbate inequities in aged residential care services.

Stagnant government funding and declining home ownership are creating a perfect storm of future challenges for New Zealand’s aging population, says Carriann Hall, CEO of CHT Healthcare Trust which operates aged care facilities in Auckland, Bay of Plenty and the Waikato.

“Alongside declining home ownership, there is also a shrinking supply of rental housing that meets the needs of older New Zealanders. Despite the report showing that District Health Board (DHB) expenditure on support for ageing in the home increased more than 120% from 2005 to 2015, housing insecurity for older people means the option of ageing in place might become hard to achieve for those who do not own a home outright.

“The frightening potential impact for older New Zealanders in our communities who can’t pay for their own aged care is they will be at risk of becoming effectively homeless as their care needs change with age.”

Older New Zealanders living in West Coast, Northland, MidCentral, Whanganui and Tairawhiti are likely to be left further behind than their counterparts in other regions. These are DHB regions where more than 60% of the population aged 85+ are categorised as deprived, according to the University of Otago New Zealand index of socioeconomic deprivation. These regions will suffer worse inequities as the ageing population grows in the coming decades and the system continues to shift towards user pays.

The report said that the West Coast and Northland also have fewer dementia beds, compared to other regions.

Without access to aged residential care services, the report shows the burden of care for New Zealand’s ageing population will fall on other parts of the healthcare system.

Aged Care Matters’ convenor and Heritage Lifecare Chief Executive Officer Norah Barlow, who operates aged care facilities throughout the country, says this is an urgent issue for New Zealand.

“Our public health system relies on the availability of beds in the aged care sector to meet the current needs of people who cannot live independently or need palliative end-of-life care. How will our already stretched public health system cope with the rising projected demands?

“The aged care sector has actively tried to engage with the Government about its broken funding model, but frustratingly we have not seen any work to address issues raised in the review the Ministry of Health commissioned in 2017.

“We’re seeing retirement villages building more Occupational Rights Agreement (ORA) beds, but only some villages have a resident population willing to pay for a higher level of care than the basic care mandated by the current funding system. The current government funding model needs to be improved to create the incentives for retirement villages to maintain facilities and beds.”

Consistent with the wider health sector, the aged care sector is also facing dangerous staff shortages, especially among registered nurses.

Jeremy Nicoll, Chief Executive Officer, Arvida Group, oversees more than 2,700 staff, including over 250 registered nurses.

“The NZIER report finds that the acute shortage of registered nurses and rising staff costs is putting at risk the ability of people with complex multi-morbidity to access aged care facilities.

“For older New Zealanders with multiple health conditions, the inability to access aged residential care limits their options and will put further pressure on our public health system.”

Representatives from the Aged Care Matters movement plan to engage with government stakeholders to discuss the findings from the NZIER report in the coming weeks.

About NZIER

NZIER is a specialist consulting firm that uses applied economic research and analysis to provide a wide range of strategic advice. It undertakes and make freely available economic research aimed at promoting a better understanding of New Zealand's important economic challenges.

This report was prepared at NZIER by Philippa Miller Moore and Christina Leung. It was quality approved by Sarah Hogan.

How to cite the report: 
NZIER. 2022. Assessing the equity issues facing aged residential care over the coming decade. A report for New Zealand Aged Care Association.

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