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Aged care providers are calling on the government to uncap daily fees for wealthier residents to help save the sector from financial collapse.

Catholic Health Australia (CHA), Opal Healthcare, Anglicare Sydney, and Southern Cross Care (Qld) say the Basic Daily Fee is inadequate to cover the costs of day-to-day services such as meals, cleaning and laundry, which have soared since the Covid-19 pandemic.

The fee is capped at 85 per cent of a single person’s basic pension, or $58.98 per day, regardless of a resident’s wealth or retirement status and unlinked from the actual cost of providing a service.

But with 70 per cent of residential homes running at a loss in the third quarter of 2022 and taxpayers footing more and more of the growing bill for our aged care system, reforms are urgently needed to make the sector sustainable.

The providers propose the Basic Daily Fee cap be removed for self-funded retirees but kept in place for aged pensioners as a safety net for those on low incomes.

The Basic Daily Fee was originally capped 40 years ago in the 1980s as part of reforms to reduce the incentive for nursing homes to unnecessarily admit patients who could have been looked after in hostels.

CHA CEO Pat Garcia said the cap is not fit for purpose and prevents providers from meeting their costs.

“Aged care providers are facing soaring costs but simply cannot meet them with this out-of-date fee cap in place,” he said.

Opal HealthCare CEO Rachel Argaman said: “If we want to maintain a quality aged care system that can properly look after everyone, including those who can least afford it, then it makes sense to ask those who can afford it to contribute more for their care.

“The alternative is to send the bill to taxpayers who already provide 75 per cent of funding for residential aged care, with this contribution growing at double the pace of consumer contributions over the last decade.”

Anglicare Sydney CEO Simon Miller said: “Meeting all the costs of meals, cleaning, maintenance, laundry and other day-to-day services for less than $59 per day is almost impossible and most providers around Australia are losing money in trying to meet these costs under the current cap.

“We believe the safety net should stay in place for those who need it to ensure every Australian has access to dignified aged care”.

Southern Cross Care Queensland CEO Jason Eldering said: “We need a fairer aged care system for today and the future built on fairness and equity for all Australians. The current cap on the daily care fee is not economically responsible or viable and is no longer relevant.”