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

Ms SPENDER (Wentworth) (13:12): I rise to speak on the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026. Australia's healthcare system is the envy of the world. That's not hyperbole.

I say that as someone who's worked in the UK's NHS for several years. Australia runs a high-quality public health system alongside an affordable private system. Primarily through the private health rebate and the Medicare levy, the Australian government encourages those who can to contribute to their own cost of care, but those who can't aren't turned away from care either.

This system has been able to balance extremes between the American model, where basic health care is a privilege, and systems like the UK's NHS, which are constantly under strain—now more than ever. This bill removes a higher age based private health insurance rebate available for those over 65 that was introduced by the Howard government in 2005. This rebate provides an additional increase in the rebate for anyone over the age of 65.

This policy predates the means testing component of the rebate that was subsequently introduced in 2012. Removing this rebate will increase the immediate cost on Australians over the age of 65 and will have some effect on the level of private health cover. Those impacts are real and raise genuine concerns, particularly from elderly Australians in the community, at an already difficult time for household budgets.

I want to acknowledge those concerns, particularly as they unexpectedly apply to pensioners and retirees on fixed incomes. Estimates of these costs vary depending on the source from about $250 according to the government's documents to $800 from the sector's own estimates. Those additional costs are not trivial.

I acknowledge that. However, I support the government in this move to bring Australia's private health system in line with a more focused principle of means testing. That is a difficult and unpopular decision to make, but I think it is ultimately the right one, not just on health insurance but more broadly.

Means testing is an important part of the Australian social compact. Australia's healthcare system, and our social support system more broadly for that matter, enables Australians to balance high-quality safety nets and an acceptable level of general taxation. It is a very delicate compact, and any moves either way warrant a proper policy discussion that helps us manage the expectations of the public.

This is a discussion I think we've neglected as our social programs over the previous decades have moved steadily away from cash payments towards in-kind transfers in composition. Policy Institute Australia highlights that, from the last decade to the end of 2026-27, in-kind payments will have increased 62 per cent to reach $305 billion, or 10.4 per cent of our GDP.

This is a trend that has also been identified with caution by economists at the think tank e61. Some of this is policy decision, but much of this is demographics. An ageing population is putting greater pressure on our health and our aged-care systems—systems that I believe should be universal.

But, for that to be the case, they must be sustainable. At the same time, cash transfers—those social supports intentionally targeted towards those most in need, schemes like the Commonwealth Rent Assistance and JobSeeker—are not increasing at the same level. These payments have increased by just 10 per cent over the same period and have not kept pace with the cost of living.

Yet our spending as a share of GDP has increased to near record highs outside the pandemic, at almost 27 per cent of GDP. And we have now unceremoniously reached $1 trillion worth of debt. This is a problem with our system that extends beyond this one area of policy, and I commend the government for difficult choices already made to address other cost pressures, including areas such as the NDIS and aged-care system.

I do not argue that the government's decisions are perfect, and I think in many cases they have to deal with unintended consequences better, particularly in relation to the NDIS. And I'm still sceptical at the speed at which they're intending to bring these changes in. But I think we need to be honest with ourselves that we have moved to a level of spending which is not commensurate with the taxation that we raise, and we need to work out how to deal with it.

This is an honest position to try and address that from. I believe that, if Australia wants to maintain that compact, which gets strong support of low levels of tax and spending, then we need to have more conversations about the role of targeted means testing in other areas of our social support systems, not just in private health systems. My principle that we need to, over time, increase our means testing and learn to better balance our budget doesn't dismiss the valid concerns held by opponents of this bill.

As I've already mentioned, this will add non-trivial costs to pensioners and retirees. Analysis released yesterday by the PBO shows that 50 per cent of the 3.2 million people expected to be affected by this policy are pensioners, raising questions about the underlying assumption that those benefiting will simply absorb the cost. Are these true net savings, or are they health costs simply shifted to the state's public health system?

These are questions I do not think that the government has adequately answered. This needs to be considered carefully, and I'm pleased that the Senate committee will have a chance to review it. However, health economists from Melbourne Institute of Applied Economic and Social Research have independently modelled the impact of these changes and corroborated the government's assessment that the changes to the rebate will be manageable within the public systems.

These academics have independently estimated that the number of people downgrading cover is likely to be similar to numbers estimated by the government. Around 44,000 people will drop or downgrade their cover. But, as Professor Stephen Duckett argues, most emergency procedures are already dealt with in the public system, meaning any changes to wait times caused by a dropped or downgraded cover will predominantly impact elective procedures rather than the emergency sections of our hospitals.

Those same Melbourne institute academics have estimated that this will increase wait times for elective procedures by a matter of days rather than months. It's not trivial. These do matter to people, but at least the expected impacts are more manageable than some would suggest.

In the meantime, the government is redirecting these savings towards Australia's aged-care system, which, as we all know, is facing growing pressures, and all of us have been asking the government to do more. I don't believe that what I'm saying here diminishes the impact it will have on older Australians, but it just highlights that there are trade-offs here that we face in managing our growing budgetary pressures.

Government funds must be directed towards areas of greatest need. Where I do think the minister made an error was in describing this policy as an issue of intergenerational equity. This is not one generation against another.

It's not about robbing boomers. It's about returning our social safety net to a principled means-tested orientation for all Australians—regardless of means—so that we have access to high-quality supports that are sustainable and within our means. When it comes down to it, that's what Australians expect.

Spending is at a record high. We have a growing tax burden, lacklustre productivity, a resource boom that is unpredictable and a debt burden that is increasingly underwriting current spending. That does mean there are genuinely difficult trade-offs ahead of us.

The concerns about this bill are genuine, and I acknowledge the impact these changes will have on older Australians at a time when the cost of living is already difficult. But I do not believe I can constantly argue that we need to rein in spending and push the government to rein in spending, and, at the same time, reject it when the government has made a fairly principled approach to try and rein in spending in this area.

I'm pleased to see the government take this bill to the Senate and have that reviewed. I think the government have some questions to answer in relation to the evidence and the detail they've provided. Those are real issues.

But, given the trade-offs, I believe any decision to increase supports for the private health rebate should be focused squarely on those most in need, not just based on age.