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

Ms CHANEY (Curtin) (13:01): I rise to speak on the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026. This bill amends the Private Health Insurance Act 2007 to remove the higher rebate currently paid to policyholders aged 65 and over. At present, someone aged 65 to 69 receives a rebate about four percentage points higher than a younger person on the same income, and someone over 69 receives about eight percentage points higher.

Under this bill, that uplift disappears. From 1 April 2027, the rebate will be set by income alone. The minister has told the House that this affects around 3.2 million people over 65.

It saves the Commonwealth just under $3 billion over four years, and the government has committed those savings to aged care. I want to start with what I agree with in relation to this reform. I accept the principle that two households with identical incomes should not receive different levels of taxpayer support simply because one of them is older.

That's a subsidy based on birth year rather than need, and it's difficult to defend. The rebate uplift was introduced in 2005 in a very different fiscal context, and, since then, the intergenerational bargain in this country has shifted a long way. When I talk with older constituents in Curtin about this, the conversation often turns to their grandchildren and to a tax burden and a housing market that looks nothing like what they faced at the same age.

That generosity of perspective is why I think this parliament can have an honest conversation about how support is shared across generations, including where that touches people over 65. I also accept that savings are going to be an area of need. Aged care is under real strain.

The average wait for home-care support has passed 12 months. Most residential homes are running at an operating loss. Delayed discharges are a growing pressure on public hospitals.

And if this money genuinely lands in residential beds and in Support at Home, that's a case that I can take seriously, and I've said so to the minister directly. So my concerns are not with the principles behind the bill. My concerns are about the evidence, or, more precisely, about the evidence that this government decided it didn't need when designing this change.

The impact analysis prepared by the Department of Health in relation to this bill is, to its credit, frank. It says that some policyholders are expected to drop or downgrade their cover, that slower growth in the insured population will mean marginally higher demand for public hospital services and that change could place additional pressure on public hospitals if consumers do not accurately assess their future health needs when choosing a level of cover.

And then it says this—and I want the House to hear it precisely. The department estimates how far this change will reduce private hospital separations—that is, episodes of care in a private hospital paid for by insurance. Of those estimates, it writes that they 'do not take into account privately insured people who decide to downgrade their cover'.

The government's participation numbers count only the people who cancel their policy outright. The 44,000 fewer insured people, the 0.4 per cent, the assurance that participation will keep growing—all of these measure cancellation. None of them measures the person who keeps the policy but strips it back, moving from gold to silver or lifting the excess to the maximum to keep the premium under control.

Those people still show up in the participation statistics as being insured. They just may not be covered for the thing they need when they need it. And, when a 74-year-old finds out her downgraded policy no longer covers a joint replacement, she doesn't disappear; she joins a public waiting list.

Health insurers tell me the downgrade effect is at least three times the size of the dropout effect. I don't simply accept the industry's figure, because they have an obvious interest here, but the department has not produced a comparative number. It has not produced any number at all.

It identified the risk, described the mechanism by which it would hit public hospitals and then left the box empty. The one relevant precedent we have is not reassuring. When the rebate was means tested in 2011, surveys for the industry found that for every person who said that they would drop hospital cover, roughly two more said they would downgrade it.

Among those downgrading, six in 10 said they'd be more likely to use a public hospital. That survey was commissioned by the insurers and it's 15 years old. It sampled people under 65 rather than the cohort this bill affects, and it measured what people said they would do rather than what they actually went on to do.

But it is the evidence before us where the government has offered none. I acknowledge that not everyone shares this concern. Health economists at the University of Melbourne have modelled the change and found the impact on hospitals is likely to be small.

Professor Stephen Duckett, who once ran the health department, has called it 'trivial'. They may well be right, but their work, like the department's, models people leaving private health insurance. The question I'm asking is: what happens to the far larger group who stay and reduce their cover?

I want to turn to how the government proposes to find out whether it got this right. The evaluation plan in the impact analysis sets a single success metric. The department will check the Australian Prudential Regulation Authority's quarterly statistics to see whether the number of insured people, as a proportion of the population, has fallen by more than one percentage point in the May 2029 quarter compared with March 2027.

If the fall exceeds one percentage point, the department says, 'This may indicate that the change has had a greater than anticipated impact on private health insurance participation.' If that happens, the department will communicate the information to the government 'as appropriate'. Let's consider what this means in practice. The change commences in April 2027.

The first formal check happens two years later. The threshold is a full percentage point across the entire population, which is a bar the department's own modelling says will not be reached because it expects a 0.4 per cent whole-population effect. And the metric counts insured people; it doesn't count what they're insured for.

A wholesale downgrading of cover among older Australians would pass this test cleanly. Suppose the threshold were crossed and the evidence showed, in 2029, that this measure had done real damage. Nothing follows from that finding.

There's no commitment to pause the change, to reverse it or to bring anything else back to parliament. The information goes to the government with nothing further required. We're being asked to legislate a change now and to find out two years from now whether it worked, using a measure that cannot detect the risk that the department itself flagged.

This is the wrong way round. Private health insurance is not a scheme that can be unwound at speed. People who drop cover face lifetime health cover loadings to come back.

People who downgrade face waiting periods to upgrade again. By the time a problem is visible in the 2029 data, it will be years in the making and years more in the fixing, and the public hospital system will have had no choice but to absorb the difference in the meantime. My second concern is about the distribution of this change.

Analysis from the Parliamentary Budget Office, commissioned by the member for Kooyong, found that, of the $3 billion this measure raises, about $1.6 billion comes from age pensioners. About 1.5 million pensioners hold private health insurance, so roughly half the savings in this bill are being drawn from people on the age pension, when ACOSS research puts 28 per cent of this cohort below the poverty line.

The minister says the average increase is around $250 a year, less than $1 a day, but an average tells you little about a group of 3.2 million people. On my own office's figures, for a couple over 70 in the base tier, the rebate falls from around 32 per cent to around 24 per cent—a real increase of roughly $474 a year. If you're on a full pension, that means giving something else up.

Here's what I find difficult to reconcile. The department's own table shows the expected fall in coverage among people aged 65 and over is 1.2 per cent, not 0.4 per cent. The 0.4 per cent figure is the whole population number diluted by millions of people this bill doesn't affect.

The government has consistently quoted the diluted figure. On 15 June, I wrote to the minister asking four questions. I asked for the modelling of dropout and downgrade rates and its assumptions, for any analysis of the impact on public hospital waiting lists and system costs, whether a carve out for pensioners and the lowest income earners had been considered, and what steps would ensure the savings actually reached aged care.

I received a courteous reply on 19 June, but it didn't answer any of my four questions. On modelling, I was referred to the published impact analysis, which is the document that says downgrading was not taken into account. On public hospitals, there was nothing beyond an assurance that Medicare exists.

On a pensioner carve-out, there was silence. On aged care, there was a list of policy intentions and a reference to the National Health Reform Agreement but no mechanism tying these particular savings to that particular spending. I want to support reform that makes this system fairer between generations, and I've said so publicly.

But I'm not prepared to vote for a measure affecting 3.2 million older Australians when the government has not modelled the principal risk its own department identified. It has not assessed the flow-on cost to public hospitals. It has not examined a concession for pensioners and proposes to check its work in 2029 against a threshold 2.5 times greater than the impact it anticipates.

So I say to the minister: publish the downgrade modelling. Publish the public hospital cost analysis. Tell this House what a pensioner carve-out would cost and why it was rejected.

I'll support the amendment moved by the member for Kooyong to carve pensioners out of this change. If the government will not model the consequences, the least this parliament can do is protect the people least able to absorb them. If that amendment fails, I cannot support this bill in its current form.

I do not disagree with the principle behind it; I disagree with being asked to take its consequences on trust. The people of Curtin, including a great many who've written to my office about this change, expect their representative to read the evidence before voting and to say so plainly when the evidence is not there.