Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026

Ms STEGGALL (Warringah) (12:46): I rise to speak on the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026. I should say at the outset that I do have serious concerns about the consequences of these changes for older Australians and our hospital systems, which are already under strain, and the broader health implications.

From 1 April 2027, the bill would remove the additional age based rebate for eligible people aged over 65, bringing their rebate into line with what younger people on the same income are paying. The government estimates approximately 3.2 million older Australians would receive a lower rebate. To be really clear, we're talking about how there is currently a rebate to a fee paid and how it would be a removal of that rebate.

For people managing retirement incomes and increasing healthcare needs, that deserves very careful scrutiny, because many are on fixed incomes, and costs of living and costs in other areas are increasing. The government argues that these changes improve intergenerational fairness and help fund aged care. I support properly funding aged care, and I know that, when it comes to balancing the budget, these are decisions around priorities.

It is essential that we protect older Australians in their dignity and help them remain independent and healthy. I also very much am focused on intergenerational fairness and fairness to young people. In this system currently, young people on the same incomes as older people are paying a higher price for private health insurance.

They are paying more for health insurance than older Australians. We have to also be real that this is a system that has real challenges. Many young Australians are simply choosing to go without health insurance because they simply cannot afford it, and there are too many other pressures on their ability to meet their needs.

Of course, we know the system around private health insurance requires young people to get on it to create the new base of income and financial support. That's because we know, as people age into the system, they of course make up a much greater share of the claims on the system. But we have to consider—and I call on the government to consider—how policies work together.

Improving aged care should not come at the expense of people's ability to obtain health care that helps them stay well. I feel like this is a bit of a convenient justification that the government is using, saying that, by taking away the rebate for older Australians around their private health insurance, that will go into funding aged care. The reality is it goes into consolidated revenue, and then the government makes decisions as to spending priorities and what it will focus on.

We know that aged-care costs are escalating because we have an ageing population, but there are many priorities before the government in deciding how it funds and what it pays for. The Australian Medical Association has raised two concerns that go directly to this question. First, older Australians may drop their insurance or downgrade their cover because they can no longer afford it.

If that is what happens, there are serious consequences. The reality is their need for treatment remains. A person who needs a hip replacement still needs that operation after cancelling their policy.

They may then join a hospital waitlist alongside patients already waiting for care. So there is a consequence to this. The consequences will be for everyone relying on the public system.

The Commonwealth may spend less on the rebates in relation to private health insurance but will then pay more when it comes to public hospitals facing additional demand, and governments will face costs elsewhere. Just because the government says it is going to put the savings into the aged-care system—again, that is not a system that keeps people out of hospitals.

There are tensions and trade-offs across all these sectors, and more transparency is required. We know patients may spend longer in pain or reduce mobility while waiting for treatment because the public system cannot cope with the increased demand. We need to understand those consequences before claiming a saving and before putting forward a justification saying that this is going to be allocated to increased aged-care funding.

I would suggest it's very likely to be a false economy. The government projects almost $3 billion in reduced federal expenditure over four years. The AMA questions whether those savings adequately account, in fact, for costs across the broader health system.

That is a reasonable question. The government should answer it with transparent, independently tested analysis. Its own modelling indicates approximately 42,000 fewer insured adults by 2028-29 than under unchanged settings; that is 42,000 people with additional demands on the public health system.

It also expects additional public hospital demand, although it describes that increase as 'marginal'—but, again, the transparency is important. The AMA contests the scale of the government modelling. The direction of the pressure is acknowledged by the government itself.

For a hospital system that is already struggling with staffing and bed availability, additional demand still requires a response. We should be asking where the capacity will come from and how it will be funded. In 2025, the National Consumer Sentiment Survey—a survey of over 5,000 Australians—found that nearly 72 per cent of respondents without private insurance said it was because it was too expensive, and 33 per cent cited excessive out-of-pocket costs even with insurance.

The reality is, once retired, Australians have very limited avenues for additional income to meet increased demands and costs. We know the system will then buckle under those increased health costs if we have more people going off private health insurance. In Warringah, the cost of seeing a doctor is already substantial for many residents.

Cleanbill pricing data reported in June that the average GP gap fee in Warringah is at around $58. For someone paying that fee, postponing an appointment may become a way to meet a higher insurance bill, or it's precisely the risk that an older person may retain their insurance while going without other necessary care. The government must examine the behavioural response of what people sacrifice to keep their cover if it passes this legislation.

In Warringah, the experience of the Northern Beaches Hospital has reinforced how much the community depends on safe, properly resourced and publicly accountable health care. That was a model where we lost two public hospitals to a private-public model that was a complete failure, and that has now had to be returned to public hands. A robust public health service is essential.

I advocated for stronger oversight around the Northern Beaches Hospital and supported the hospital's return to public ownership. Unfortunately, that's only occurred as a result of really drastic consequences—tragic deaths in our community. The experience of our Northern Beaches region makes me particularly conscious of the need to assess funding decisions against their practical consequences for patients and staff.

Northern Beaches Hospital's new surgical hub opened on 1 July, with the New South Wales government expecting it to deliver up to 5,000 additional operations each year. That is a welcome investment in reducing waiting lists for our community and patients across New South Wales. The Commonwealth, though, must explain whether cutting older Australians' insurance rebates could in fact generate additional public hospital demand that absorbs some of this new capacity.

We need both levels of government, state and federal, to be working together. Every Australian should have access to timely public health care, regardless of whether they hold insurance, so government must ensure that the public system has the resources to deliver it. We know that, at the moment, elderly Australians are cutting back.

The AMA's second concern is equally serious and risks being overlooked if the government measures success mainly by how many people keep their insurance, because some older Australians have maintained their cover for decades. To meet higher premiums when they are in a fixed-cash-flow situation—often maybe asset rich but not always—they are likely to cut back on other healthcare spending.

They might postpone a GP appointment with a gap fee, delay a recommended scan or put off seeing a specialist. The insurance policy remains in place, but the person goes without care. So continued participation cannot, by itself, demonstrate that the change proposed is affordable or harmless or has had a positive effect.

The AMA warns that delaying necessary care could worsen health outcomes, and then, ultimately, it is our system that will bear the brunt. It's a risk the government needs to examine directly, including through consultation with older people about the choices they would face. The government's estimated average rebate reduction is $252 per affected person in 2028-29.

Individual losses will vary with age, income and the cost of their policy, so an average can't really tell us whether a pensioner can absorb that expense alongside their other bills. Nor can we assume that someone who keeps paying for their private health insurance has done so without sacrificing other things that are also essential. There's also a difference between retaining a policy and retaining useful cover.

Downgrading a policy may mean losing coverage for treatment the person later needs. The AMA highlights procedures such as cataract surgery and joint replacement, which become increasingly relevant as people age and can require more expensive insurance products. So we do need to understand what cover people retain and whether it meets their needs.

The AMA also warns that reduced activity could affect the viability of private hospitals, particularly smaller or regional facilities. If services close, patients may have fewer options and public hospitals may then face even further pressure. These are connected parts of the same health system.

They need to be assessed together. You can't take from one claim to be giving back in another without considering all of the consequences. The government should—I call on it to—publish a fuller assessment of the effects on public hospital demand, waiting times and private hospital viability, with independent scrutiny of the assumptions about people dropping or downgrading their cover.

The specific proposal was developed without consultation because of budget confidentiality. That's a red flag there in itself. The Office of Impact Analysis has found that further consultation would have improved the analysis.

Parliament now needs to ensure that those affected are properly heard. Any changes should be accompanied by public reporting on affordability and access to care, including evidence of people delaying treatment, so emerging harm can be addressed promptly. Unfortunately, we see this too often: ill-thought-out and badly consulted policy is announced and pushed through, and then we have to deal with the consequences.

I do want to talk about one of the justifications, that being intergenerational equity, and I do acknowledge the case for intergenerational equity. Under the current system, an older Australian and a younger Australian on the same income, probably with vastly different assets—let's get real; younger people do not have the assets older people have—can receive different rebates for the same policy because of their age.

Younger Australians also help sustain the very system because community-rated private health insurance is subsidised through young people's premiums, even though they generally make fewer claims. So genuine equity requires more than treating everyone identically. Many low-income retirees have greater healthcare needs, and that is why the viability of this system is so important.

In 2022, 65 per cent of men and 60 per cent of women aged between 65 and 74 had two or more selected long-term conditions, compared with only 30 per cent of men or 36 per cent of women aged between 25 and 44. The public system does not cover common procedures like cataract surgery, which affects many in our communities. The government should preserve additional support for older Australians in the base income tier, while better targeting the assistance for those on higher incomes, and some consideration should be given for those that have more equity and more assets.

Older Australians need confidence that they can afford the care that keeps them well and independent. The test for this legislation must be whether it improves people's access to care and supports a sustainable health system. Those outcomes must guide the government's response to the concerns raised in the bill's inquiry process.