Are NDIS plans being cut?

To find some answers, we delved deeper into the NDIS data than any reasonable person would go. What emerged was reminiscent of a teenager’s relationship status on Facebook circa 2009: it’s complicated.


Exploring the future of NDIS plans and funding allocations. Reductions, fact or fiction?


In a world of competing NDIS narratives, it’s not easy to feel you have an accurate sense of what is going on with the Scheme. For months now, we’ve all been hearing horror stories about plans slashed at review while simultaneously being told that the NDIS is forking out more cash than ever before. So what’s actually happening? Does the data support Shadow NDIS Minister Bill Shorten’s accusation that there is an ‘undeclared war’ on the NDIS? Or are there just a few bad Planners out there, undermining a system that—by and large—works?

Payments are indeed going up

If you’ve been paying attention to NDIS data over the last two years, you’ve probably seen a graph like the one below, charting the increase in average spend per participant.

Source: NDIS Report to Disability Ministers for Q2 of Y9


The NDIA is keen to hammer home the message that the average amount paid on behalf of participants is going up each year, feeding fears about Scheme costs. As we can see in the graph, there was an 11.5% increase in the average payment per participant between 2018 and 2021, and a median increase of 18.2%. Importantly, these figures represent the amount participants are spending—not the amount put in their budget.


A lot more research is needed to understand this growth; as with anything NDIS-related, there is probably a myriad contributing factors. However, two contributory factors we know about are increased prices and plan utilisation.

  • 9.87% in 2019-20 (including COVID loading)

  • 2.74% in 2020-21

  • 5.16% in 2021-22

Every year (and lately, multiple times a year), there is an increase in the maximum price that providers can charge for an NDIS support according to the NDIS Price Guide (sorry, what’s it called…the NDIS Pricing Arrangements and Pricing Limits). Over the last few financial years, according to an independent review of Scheme forecasts by Taylor Fry, prices for Assistance with Self Care Standard—Weekday have increased by:

As prices go up, payments naturally follow; but the rate of payments is rising faster than price increases, so we have to look at other pieces of the puzzle, including plan utilisation.

Plan utilisation and price increases are inherently linked. As prices go up, and plans aren’t indexed to match, people are going to end up using more of their funds. However, Quarterly Reports have also consistently shown that people use a larger percentage of their plan the longer they are in the NDIS, getting used to the Scheme’s weird quirks. The further we move away from the transition years, the greater is the proportion of NDIS-savvy people in the Scheme. The Taylor Fry report predicts that by 2024-25, utilisation for non-SIL participants will be at about 86%, and about 96% for SIL participants.

Although increased plan utilisation is contributing to concerns about the NDIS’ price tag, let’s keep in mind that this is actually a good news story: people with a disability learning to master a complex Scheme?


gif

However, if plan sizes trend downwards, increased plan utilisation may not mean more savvy NDIS consumers or an increase in the average amount being paid per participant. It may just mean that people are using a higher percentage of their plan to access the same support.



Plans are going down

While payments are going up, the second Quarterly Report of this financial year shows that 2021 was the first year in which plan sizes started to decrease. As you can see in the graph below, there was a 3.8% drop in the average plan size between 2020 and 2021. For participants who have seen cuts to their plan, this provides some cold comfort: that they are not alone.


Source: NDIS Report to Disability Ministers for Q2 of Y9

While 3.8% might not sound a lot, it must be considered in the context of rising prices and an increasing number of services paid for by the NDIS (including COVID-related expenses).

The NDIA argues that average plan sizes have gone down because of the changing demographic of NDIS participants. Between 2018 and 2021, two cohorts have shifted significantly:

  • The percentage of participants in SIL has decreased from 7% to 5%.

  • The percentage of participants aged between 0 and 14 has increased from 37% to 41%.

Both of these changes have impacted average plan size because while SIL participants usually have quite large plans, children tend to have smaller plans. In 2021, the average plan size for people in SIL was $346,160compared to an average of $68,500 for all participants. In comparison, the average plan size for children under 6 was $24,600. Helpfully, the latest Quarterly Report also charts what plan averages would have been if the participant demographic in previous years was the same as in 2021.

Report to Disability Ministers for Q2 of Y9 Source: NDIS

As you can see, even if the participant cohort had always looked this way, plan averages would still have dropped between 2020 and 2021. However, instead of a 3.8% drop, it would have fallen by 2%.


Is it a bad thing that plan budgets are going down?

For many people, plan cuts are disastrous. However, as the NDIA is always keen to remind us, there are circumstances where a plan cut may be good news—or at least not bad. For example, a plan may decrease because:

  • a capacity building support has increased a person’s independence;

  • assistive technology (AT) or home modifications from a previous plan have been purchased; or

  • the participant no longer requires a support because of changes in personal circumstances.

Equally, there are also good reasons a plan might be expected to go up: AT or home modifications might be added to a plan; a participant might gather the evidence they need to justify a support; or a person’s support needs may increase because of changing personal circumstances or declining functional capacity. When looking at averages, we have to acknowledge there are push and pull factors in both directions, and more research would be needed to determine which is likely to be stronger at any one time.


Plan inflation down

Another data point worth keeping an eye on is the rate of plan inflation. ‘Plan inflation’ is just a fancy way of talking about the average amount by which reviewed plans have grown in that quarter. Over the last few quarters, we have seen a significant drop in plan inflation.


Source: NDIS Report to Disability Ministers for Q2 of Y9


The second Quarterly Report outlines some complex data collection related issues that partly explain why inflation rates were previously so high. Even so, it is still clear that plans are not rising by as much as they used to.


Whether the drop in plan inflation is a problem or not really depends on what is driving it. There are potentially reasonable explanations for why plans might be less likely to increase at the moment. In the early years of the Scheme, when everyone was still trying to figure this NDIS thing out, Planners may have significantly underestimated a person’s support needs. If this was fixed in subsequent plans, it would lead to temporarily inflated growth. People may also have been more likely to add AT or home modification to plans at their first post-transition Plan review.


What we know for sure is that the rate of plan growth we have seen recently is unlikely to keep up with inflation in the future. According to the Taylor Fry report, prices for ‘Daily Activities and Social, Community and Civic supports’, which account for 73% of NDIS supports, are expected to rise by 3.5% per year. This means that a participant with less than 3.5% growth in their Core budget will not be able to access the same level of support.


The same Quarterly Report also provides stats for the percentage of participants who have seen their plan increase or decrease by more than 5% in a financial year, charted out below:


The key takeaway from this graph is that between 2018-19 and this financial year (to date), there has been a 19% decrease in the number of people who saw their plans grow by more than 5%. There has also been a small increase in the number of people whose plans have dropped by more than 5%. The 13% increase in people whose plan has stayed within 5% of the original figure is probably driven in part by the new option people have to roll over their plans.


People ain't happy

Another thing to consider when discussing plan size is that there are plenty of indications that people are unhappy with their plans. In the second quarter of this financial year, 34% of complaints received by the NDIA related to NDIS plans, compared to 14% in all previous quarters combined. There has also been a 400% increase in external reviews—a figure that is even more alarming in the context of more plans being rolled over. All of these are signs that the impact of plan reductions is being felt in the community.

Human beings are storytelling creatures. That’s why cases of individual plan cuts often hit us harder than statistics. People themselves feeling the effects plan reductions probably don’t give a flying hoot about national statistics, and who can blame them? However, statistics are our only tool for distinguishing between policy and a one-off mess up, which is why a 3.8% drop in plan averages (or 2% accounting for changing demographics) raises questions.

I’ve never seen the point in getting my future told. If I’m inevitably going to be hit by a bus tomorrow, kindly do not tell me. But I would happily slip $20 to any seer who can get me a copy of the Quarterly Report from the end of this calendar year—because what I really want to know is whether this drop in plan sizes is going to be a blip or a trend.

0 views0 comments