Associate Health Minister Casey Costello. Photo: RNZ / Samuel Rillstone
Changes to the aged care funding model are on the cards, with a ministerial advisory group being established to make recommendations to a system the government says is out of date.
The government currently spends $2.5 billion a year on aged care, which is provided privately.
Associate Health Minister Casey Costello said there were "major political considerations" attached to any changes, and so an independent group was needed to make recommendations, as well as long-term thinking and a bipartisan approach.
She said the announcement was about better health outcomes for the 900,000 New Zealanders who were over 65, and a better, fit-for-purpose aged care system.
The number of New Zealanders aged 65 or older is expected to increase to 1.3 million by 2040.
"We know that New Zealand has very good aged care, provided by dedicated people. However, the way that these services are funded is outdated and does not recognise the connection between the various parts of the system or the future investment required," said Costello, who is also Minister for Seniors.
"Essentially, our aged care model is out of date and piecemeal change isn't the solution."
The ministerial advisory group (MAG) would provide a report and recommendations in three areas:
- The funding model needed to support sustainable services, particularly a sustainable supply of aged care beds
- How the costs of providing aged care could be reasonably shared between those receiving care and the government
- The changes needed to support cohesion and integration between aged care services and health services, and between aged care and disability support services.
"Encouragingly, there is great practice and innovation in different parts of the aged care system and standardising current good practice would be a significant step forward," Costello said.
"We also need a system response that recognises most people want to stay at home if they can and allows them to access and move between the different levels of care they might need."
A Health New Zealand review into aged care funding and service models released in 2024 found the services were stressed, and the sector was struggling to meet the needs of older New Zealanders, particularly in regional and rural areas.
An ageing population would exacerbate those existing challenges, the review said, estimating the country would be short 12,000 residential care beds by 2032.
It said the sector was underfunded, and suggested levels needed to be increased, although increased funding alone would not solve the problems.
The second phase of the review suggested a range of options, including requiring all residential care residents above income and asset limits to pay unsubsidised fees, and supporting individuals with low needs in home care support services instead of residential care.
The MAG's work would be informed by that review, as well as a recent select committee inquiry into aged care.
The MAG is expected to begin work by January and report back by the middle of 2026, and any changes to the funding model would be implemented in 2027.
While nobody has been appointed to the group yet, the government said there had been "liaison" with the aged care sector about possible nominees.
The group would be supported by the Ministry of Health.
A recent report from the New Zealand Nurses Organisation said the sector was in crisis, which Costello pushed back against, saying the government had increased spending by $270 million in the last two years.
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