Health savings accounts could fix intergenerational burdens in aged care, superannuation and medical insurance cover, writes Pat Garcia. Source: Australian Financial Review.
If the stimulus-heavy federal budget was not the right moment to finally fill the gaping funding hole in Australian aged care, one can conclude the moment will never come. It’s time, therefore, for the Morrison Government to start getting creative.
The aged care royal commission has laid bare the hard choice facing the Government: find the billions required each year to bring the sector up to scratch, or accept the examples of poor quality care that have shocked us recently will become more common.
Public funding will need to keep playing a significant role, but there are other options for the government to consider. Bundling a range of thorny issues – private health insurance, superannuation, and aged care – may create the opportunity for historic reform.
The solution may be to shift away from the indirect intergenerational financing mechanism of private health insurance and towards a more direct actuarial funding tool.
Health savings accounts might be facilitated as an add-on to superannuation and an alternative to private health insurance, offering consumers a better way to meet their health expenses later in life.
Through these HSAs, a portion of income each year could be deposited to an accumulating individual or family account, to pay for care as it is needed – most likely much later in life.
HSAs would reflect the life-cycle pattern of health expenditure, accumulating in younger years when most people enjoy good health, and then being drawn down in old age as income falls and healthcare needs mount.
Pat Garcia is chief executive of Catholic Health Australia.
Why we need a bold new twist on saving for old age (Australian Financial Review)