Cuts to private health rebate 'risk public hospital strain'

The federal government is looking to cut the higher health insurance rebate for people aged 65 and over, a move it says will free up more funding for things like aged care services.

But the AMA and Private Health Australia (PHA) have both warned against the move in their respective submissions to the Senate Community Affairs Legislation Committee, which is currently looking at legislation to amend private health insurance and modernise rebates.

The AMA has called for an exemption to be put in place for those on Medicare Levy Surcharge base-tier incomes, currently $105,000 or less for singles and $210,000 of less for families.

AMA National President Dr Danielle McMullen said the AMA supported the government’s efforts to secure additional funding for aged care, but it should not come at the expense of older Australians’ access to healthcare.

“Many older Australians have maintained private health insurance for decades. Removal of the higher rebates for people aged 65 and over, particularly those who are on lower incomes, risks making that cover less affordable at a time when they are most likely to need healthcare,” she said.

“If older Australians are forced to leave or downgrade their cover, that care does not simply disappear. It is likely to shift to public hospitals that are already under enormous strain, further reducing timely access to care for patients.

“Some people may also delay GP visits, specialist appointments or diagnostic tests to help absorb higher insurance costs, potentially worsening their health outcomes.”

PHA said the move could see more than three million older Australians facing higher insurance costs, causing a predicted 62,000 to drop their cover and 200,000 to downgrade theirs. It estimates it could result in almost $260 million a year in additional public hospital expenditure for state and territory governments.

It warned it would lead to people losing access to common procedures such as cataracts and hip and knee replacements.

In WA, both public and private hospitals have faced significant strain as the population grows and workforce and capacity struggle to keep pace.

Data from the Australian Institute of Health and Welfare show patients in WA waited the longest in emergency departments in 2024/25. The postponement elective surgeries across a number of hospitals last winter prompted the AMA (WA) to warn of a public health crisis.

More recently, workforce pressures were blamed for St John of God’s decision to stop providing 24/7 ED care at its Murdoch Hospital, instead beginning 8am-10pm opening hours from September.

PHA chief executive Dr Rachel David said many older people had been investing in health insurance for decades on the basis they are likely to need it for costly hospital care in their 60s, 70s and beyond.

“This is also about being able to afford the dental care, physiotherapy, podiatry and optical care that help people stay healthy and independent. If people can’t afford their health cover, coverage for allied health services will be one of the first things to go,” she said.

In 2025, private health insurance contributed $11.8 billion towards 2.8 million hospital episodes for Australians aged 65 and over. Around 67% of planned surgery occurs in the private sector, PHA said in a statement.

Dr McMullen also warned the impact would be felt in the private sector, particularly in smaller and regional facilities already operating under pressure.

“Private hospitals play a critical role in Australia's health system, and many are already struggling with narrow margins,” Dr McMullen said.

“Once a private hospital service is lost, or specialists leave private practice, it can be very difficult to rebuild that capacity. That has long-term consequences for patient access and the resilience of our health system.”

The Department of Health, Disability and Ageing has been contacted for comment.