Australia’s current approach to long term healthcare is unsustainable and in need of substantial reform after a survey released today revealed more than four million of the country’s 5.4 million baby boomers do not have the financial resources or insurance to pay for future health services. Worsening economic conditions have further shattered baby boomers’ confidence in their ability to pay, with the number of boomers “very worried” about paying for health care increasing seven-fold in the past three months.
An omnibus survey, commissioned and analysed by Fujitsu Consulting, of 6,000 Australians aged between 45 and 64, conducted between May and July 2008, recommended urgent structural reform, with a greater focus on health preservation, education, community-based care and use of new technologies to manage the expected explosion in demand for health services by ill-prepared, aging baby boomers.
A follow up survey of 1,000 baby boomers conducted in October in light of deteriorating market conditions found 40% are now “very worried” about paying for health care, compared to just 6 per cent in the mid-year survey. The number of people not worried about paying for healthcare halved from 16 per cent to just 8 per cent in the three months to October.
According to the report, The Healthcare Conundrum – Baby Boomers, Superannuation and Health Funding: The New Reality, most baby boomers won’t have enough superannuation to fund their retirement and future healthcare needs. When asked if superannuation would be their main source of income in old age, 69% of survey respondents in the mid-year survey said yes. Yet, when asked if they had enough super, two in three said no. Almost 90% of baby boomers were more worried about their super now than 12 months ago.
The majority of respondents’ superannuation was worth between $200,000 and $300,000. In the October survey update, most people cited poor super returns (24 per cent) as the key factor driving their concern, and 83 per cent said their super performance would be hit by economic conditions, compared to just 24 per cent mid-year. Other concerns were the cost of health care (13 per cent), the credit crunch (13 per cent), global recession (13 per cent) and falling property values (11%). Despite their concerns about paying for health care, almost six in 10 respondents (57%) had no health insurance.
When asked how they would fund their future healthcare, 15% said they did not know. Another 14% nominated a loan, while 15% said they would rely on family. The report highlighted a need for greater education about adequate superannuation levels and incentives to encourage baby boomers to invest more in their future, according to Jeff Smoot, Health Industry Director, Fujitsu Australia.
“These findings present challenges for healthcare, superannuation and government bodies,” Mr Smoot said. “We envisage a future where a small proportion of boomers will be able to adequately fund their healthcare, but the majority will have insufficient funding and look to the public healthcare system. They will rely on government support – and significant tax dollars - unless they are encouraged now to contribute more to their future wealth.”
The report contains recommendations developed by Fujitsu following a workshop where the survey’s findings and implications were discussed by a range of senior healthcare practitioners, managers, advisors and business owners at the Australian College of Health Service Executives (ACHSE) National Congress in August 2008.
“With Australia’s baby boomers comprising 25% of the population, compared to 13% for people currently aged over 65, it’s widely accepted aging boomers will create a massive burden on the healthcare system,” Mr Smoot said. “The current approach to long term healthcare is not sustainable – and the ‘super stress’ being created by the deteriorating economic climate makes the need to address the issue even more urgent.
“What is needed is substantial change to address care in a community setting and provide alternative funding models to support the sector. Greater focus must be placed on community-based care and programs, prevention, education, screening services and self-help.
“New technologies can be harnessed to provide better community care, mobile patient management and remote monitoring at a fraction of the cost – but that also requires commitment to delivery of highly available, high bandwidth networks.” Confusion around the responsibilities and accountabilities of State and Federal Governments, health professionals and GPs that plague Australia’s complex health system also need to be addressed to remove bureaucratic road blocks and get better care delivered when needed, according to the report.
“There is a significant opportunity to radically transform healthcare in Australia to prevent illness in the community, leverage emerging technology and clarify the roles and responsibilities of key industry players,” Mr Smoot said. “There are also opportunities for superannuation and health insurance companies to create new and compelling products that can help baby boomers save for their futures now – before it is too late.”
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Note to editors: The Study The Healthcare Conundrum – Baby Boomers, Superannuation and Health Funding: The New Reality was based on 6,000 telephone interviews with people aged 45 to 64, conducted between May and July 2008 on behalf of Fujitsu Consulting. It was statistically representative in terms of age, state and geo-demographics. This survey examined baby boomers’ superannuation arrangements, their views on their financial positions and expectations for the future.
FOR A COPY OF THE REPORT PLEASE CONTACT SHUNA BOYD