Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026
Dr SCAMPS (Mackellar) (18:20): I rise to speak on the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026, which I cannot support in good faith. From 1 April 2027 this bill would abolish the additional age based private health insurance rebate for Australians aged 65 and over. Instead, the rebate would be determined by income alone.
The government's modelling estimates that 3.2 million Australians will be affected at an average additional premium cost of around $250 a year. Many of those who will be affected are pensioners and retirees living on fixed incomes who have maintained private health insurance for decades. The government estimates that around 44,000 fewer older Australians will hold private health insurance by 2028-29 than would otherwise have been the case.
The measure is expected to save approximately $3 billion over four years, with those savings directed to deliver additional aged-care beds and supports. These estimates quoted by the government have been contested by several other organisations, which I'll elaborate on later. Also missing from the government's narrative are the costings related to the increased load to the public health system and the increased burden of chronic disease as people postpone medical care.
Currently, Australians aged 65 and over receive a higher rebate than younger Australians on the same income. This is in addition to the cross-subsidy already built into private health insurance through community rating, under which people generally pay the same premium for the same policy regardless of their age, gender or health status. The bill would remove that additional age component so that the rebate is calculated in the same way for people over 65 as it is for younger Australians.
This matters greatly in my electorate of Mackellar. As of December 2025, almost 79 per cent of people in Mackellar had private health insurance. More than 105,000 adults held hospital cover.
Private health insurance funded more than 74,000 hospital admissions for people in Mackellar, with $277 million paid in hospital benefits. People aged 65 and over accounted for more than half of those hospital admissions. Among the major procedures funded were hip and knee replacements, interventional cardiology, orthopaedic treatment, endocrinology and back and neck procedures.
So, for my community, this is not an abstract debate about rebate formulas; it directly affects how older Australians access health care and how much pressure falls on our public hospitals. The government argues that older Australians are generally less likely to change their decision to hold private health insurance in response to changes in the rebate. It argues that the additional subsidy is poorly targeted and that the money can be better directed towards other aged-care priorities.
There is no question that we need greater investment in aged care. Our states desperately need additional aged-care capacity to address the shortage of aged-care places across the country and bed block in public hospitals. Too many older Australians remain in hospital because the appropriate care and living arrangements are simply not available elsewhere.
I support the intent of directing public money where it can achieve the greatest benefit. But this bill, as currently drafted, risks unintended consequences, particularly for those older Australians who are not wealthy and who are already struggling with rapidly rising living and insurance costs. A central assumption behind this reform is that reducing the rebate will have only a marginal effect on private health insurance participation.
That assumption deserves much greater scrutiny. Private Healthcare Australia, PHA, has modelled the direct financial impact of this bill on policyholders, and it is estimated that the added cost of the rebate change will include things like $151 per annum for a gold single policyholder aged 65 to 69, $302 per annum for a gold single policyholder aged 70-plus and $604 per annum for gold couple policyholders aged 70 and above.
When PHA combines the rebate change with its assumed ordinary April 2027 premium increase, the estimates rise substantially. For a couple aged 70-plus with gold cover, their yearly cost is estimated to be approximately $1,614 per year. This will put significant pressure on already stretched household budgets.
The Office of Impact Analysis identified this risk and found that private health insurers participation could fall by more than anticipated. It also warns that people may respond not only by cancelling their insurance but by downgrading their level of cover. That distinction is important.
A person may technically remain privately insured while dropping the level of hospital cover they need for procedures such as joint replacements, cataract surgery or cardiac treatment. If people discover only later that their downgraded policy does not cover the care they need, those patients are likely to turn to the public system. That means longer public waiting lists and greater pressure on state hospitals.
The Australian Medical Association has raised precisely this concern. The AMA accepts that additional aged-care funding is needed but argues it should not be funded by making private health care less affordable for lower- income older Australians. Analysis released by the Parliamentary Budget Office found that about $1.6 billion would be raised from age pensioners.
It is this cohort who are most likely to have chronic conditions, more likely to need their private health insurance and more likely to need procedures that are in the gold level tier of health insurance. The AMA warns that cancellation and downgrading could increase pressure on public hospitals and further weaken private hospitals, particularly in regional areas.
Another unintended consequence could be that older people keep their cover but find it increasingly difficult to afford it and so offset their increased expenditure by forgoing other care like visits to their GP, their regular medicine or out-of-hospital visits with other specialists. This will potentially delay necessary care and worsen their health outcomes.
I've heard from a multitude of my constituents across Mackellar. Many have told me that the loss of aged based rebate could be the difference between retaining private health insurance and giving it up. Gavin, from Beacon Hill, is over 70.
He has worked for more than 50 years and continues to pay tax and support himself and his wife, largely from his superannuation. He told me: This rebate has helped us remain in private health insurance. If it is removed, I will really need to think about the alternatives.
Kerry, from Narrabeen, told me that she and her husband have paid for private health insurance for more than 50 years. They feel that, after decades of rising premiums and declining value, this additional cost is the final straw. She told me they intend to cancel their private health insurance.
Laurel, from Warriewood, still has two adult children on her family policy. Her family already pays around $800 a month. She's approaching retirement and fears further increases will make maintaining private hospital cover unsustainable.
Rita, from Cromer, feels that older Australians who have worked, paid taxes and provided for themselves throughout their lives are increasingly being asked to absorb costs at precisely the stage of life when their healthcare needs are increasing. Robyn, from Belrose, has been retired for 12 years and remains a self-funded retiree—but only just. She has held private health insurance continuously since she began working at age 17.
She told me that, after 57 years of paying premiums, the age rebate could now be the difference between being able to keep that insurance or being forced to give it up. John and Robyn Gibb are both in their 80s and have significant health needs. Robyn has experienced breast and uterine cancer, requiring major surgery, and John lives with a severe disability following polio.
For Australians in circumstances like theirs, timely access to health care is not a luxury. Geoff and Sharon, from Newport, are in their mid-70s. They pay more than $440 a month for private health insurance while relying primarily on the aged pension.
They still have a mortgage. Sharon has suffered a stroke. Geoff has experienced two heart attacks.
They told me very clearly that, if the cost of their insurance rises significantly, they will no longer be able to afford it. These are the people we must keep in mind when considering this bill. I accept that some Australians over 65 do not need a greater incentive than younger Australians to hold private health insurance.
A wealthy retiree should not automatically receive a greater public subsidy simply because of their age. But pensioners and lower-income retirees are in a different position entirely. People like Gavin, Kerry, Laurel, Rita, Robyn, John, Geoff and Sharon are telling us that the rebate influences whether they can afford to remain privately insured.
Their concerns are reflected in stakeholder evidence to the Senate inquiry. Council on the Ageing—COTA—Australia has raised particular concerns about pensioners, women, people with chronic illness and Australians living in rural and regional communities. It has also warned that reducing private coverage may shift additional demand into the public system.
COTA has also called for broader reform of private health insurance affordability and value, including better transparency around out-of-pocket costs and stronger consumer protections. National Seniors Australia argues that this policy cannot be considered in isolation from annual premium increases and adjustments to the rebate. In one gold cover scenario, it estimates that a household aged over 70 could face a net premium increase of almost 28 per cent.
National Seniors also argues that the government's estimate of 44,000 fewer insured Australians does not sufficiently capture the potentially much larger number who may downgrade their policies. In a survey they conducted of around 2,000 older Australians, 8.4 per cent of respondents were considering dropping hospital cover and 12.5 per cent were considering reducing their level of hospital cover.
This was extrapolated to the wider insured older population as up to around 270,000 people dropping hospital cover and up to 400,000 downgrading their cover. NSW Health modelling goes further, analysing public health system consequences. The modelling estimates that up to 80,000 people aged 65 in New South Wales alone could cancel or downgrade their private health insurance.
This estimate in one state alone exceeds the Commonwealth's national estimate of roughly 44,000 people who would no longer be insured. In New South Wales, this will mean more than 23,000 additional surgeries per year moving into New South Wales public hospitals and 12,000 additional hospital bed days. The Colorectal Surgical Society of Australia and New Zealand has warned that, if older patients leave private care, more colorectal procedures will move to already stretched public waiting lists.
For cancer patients, treatment delays can have serious consequences. The Australian Dental Association has also highlighted that, for many older Australians, extras cover is one of the principal mechanisms through which they meet dental costs, because Medicare provides limited support for most adult dental care. Cancellation or downgrading can therefore lead not only to increased hospital pressure but to people delaying essential dental treatment.
There are also legitimate questions about the overall fiscal impact of this policy. The Commonwealth may save money on the rebate, but, if more patients enter public hospitals, wait longer for treatment, experience deterioration in their health while waiting or require aged care sooner, some of those savings may simply be transferred to state health budgets or create additional costs elsewhere in the Commonwealth system.
State governments and hospital stakeholders have argued that these effects have not been sufficiently modelled. I support the government's objective of ensuring taxpayer funded rebates are properly targeted. I agree that higher income older Australians should not automatically receive a larger subsidy simply because they are over 65, but reform must protect the people least able to absorb these increases.
There is a sensible path forward, so I ask the government to release detailed modelling quantifying additional public hospital admissions, costs, beds or waiting times by state or hospital. I also ask the government to consider an amendment to this bill before it proceeds that exempts people aged over 65 who are pensioners or on low incomes from the rebate reduction.