Disability insurance scheme set to spark start-up opportunities

The creation of a national disability insurance scheme would be a boon for the private sector, experts claim, suggesting there are business opportunities as the industry welcomes more commercial providers.

Earlier this week, Prime Minister Julia Gillard launched a Productivity Commission report that calls for a scheme to provide disability insurance to all Australians.

Gillard said it would take seven years before it was fully implemented, announcing $10 million in technical funding as a first step.

While opposition leader Tony Abbott has thrown his support behind the scheme, there is some hesitation on the part of WA Premier Colin Barnett.

“I am getting a little tired of schemes coming out of Canberra to take over areas of state administration only to find that they invariably fail,” Barnett has said.

The proposed scheme would be overseen by the National Disability Insurance Agency. It would provide insurance to cover the cost of support if any Australian was born or became significantly disabled.

It would not be means tested and would not require co-payments because that would discourage people from using therapies they needed. It would cost around $13.5 billion a year.

The Commission suggested this should be paid for from the Federal Budget, rather than a Medicare levy-style charge on all taxpayers. It said spending cuts or tax increases would be the way to go.

Under the model, disabled people would receive a funding entitlement based on need. They could choose to spend that entitlement themselves or pay an “intermediary” to do it for them.

According to the report, government agencies are still the biggest providers of disability services.

While agencies increasingly outsource these services, the result in most states and territories has been increasing reliance on not-for-profit rather than commercial provision.

One exception is Victoria, which has already started moving away from centralised control. In its report, the commission says the shift to funding entitlements “has been associated with the entrance of for-profit agencies in that state”.

Barbara Merran, founder and a director of commercial provider Southern Cross Community Care, says private providers are already increasing efficiency and innovation in the sector.

“If you look at individual government departments, senior individuals would say we get a much better deal from the private sector,” Merran says.

The commission is relying on more competition between providers to keep the annual cost of the new scheme to $6.5 billion on top of the $7 billion already spent on disability services.

But Chris Sparks, executive office of the Assistive Technology Suppliers Association, says the scheme is not necessarily a godsend to for-profit businesses.

Sparks says decentralisation and greater certainty of funding will improve cashflows and lead to consolidation at the high-volume end of the disabled equipment market.

Even so, there will still be room for mum-and-dad operators to service high-needs clients who require tailored modifications to standard wheelchairs and other devices.