Medical specialists are sounding the alarm over plans to cut private health insurance rebates for older Australians, warning the plan to save and repurpose $3 billion (US$2.14 billion) in the federal budget will stress the public hospital system.
The Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 removes the rebates available to people aged 65–69 (who receive a 28.139 percent rebate), and those aged 70 (32.158 percent) and over from April 1, 2027.
The federal government expects the measure to save almost $3 billion over four years, and will reinvest the funds into the aged care system.
“About a quarter of their private health bill will be paid for by taxpayers. I think that’s a pretty equitable place to be.”
However, medical and specialist bodies warn the savings may not reflect the wider cost to the health system.
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Increased Pressure on Public System: AMA
The Australian Medical Association (AMA) said it was unconvinced the measure would produce genuine net savings.
“Where private patients leave the private system and seek treatment in public hospitals, costs are not eliminated. They are transferred,” the AMA said.
It warned that even a modest decline could add demand to public hospitals dealing with limited bed capacity and long elective-surgery waiting lists.
The AMA wants the rebates retained for older Australians in the lowest income tier, they also warned some older Australians could be forced to drop or downgrade insurance cover.
Nearly 15,000 More Elective Surgery Cases: Qld Health
Queensland Health also warned about potential strain on the public system grabbling with over 60,000 patients on elective surgery waiting lists, as of May 2026.
In their submission, they estimate a 10 percent rebate cut will add an additional 14,383 elective surgery cases to the public system and could increase wait times.
“The extent to which changes in PHI participation translate into changes in public hospital activity and costs remains uncertain,” Queensland Health said.
Specialists Warn Delays Could Lead to More Falls
Some specialist groups warned some patients’ without cover could be forced to wait for treatment, and in that time, their conditions could worsen.
The Australian Society of Ophthalmologists said delays to cataract surgeries cause “serious, quantifiable harm.”
“Delayed cataract surgery leads to a 50 percent increase in falls and fractures, which adds to increased hospitalisations, rehabilitation time, and bed days occupied in public hospitals,” the Society said in its submission.
The Society also pointed to research that estimates cutting wait times for cataract surgery from 12 months to three could prevent over 50,000 falls.
Women’s Health at Risk
The Royal Australian and New Zealand College of Obstetricians and Gynaecologists said private hospital access allowed for more diagnosis opportunities.
“Older women commonly require investigation and treatment for conditions such as post-menopausal bleeding, pelvic organ prolapse, and gynaecological cancers,” the College said.
“Access to private hospital treatment can be an important component of care for these conditions.”
The Urological Society of Australia and New Zealand additionally said these changes were “poorly targeted,” saying those affected most include pensioners, low-income self-funded retirees, and Australians from regional and rural locations.
“The Bill may also generate significant downstream costs for the health and aged care sectors that have not been adequately quantified by the government,” they said in their submission.
Government Says Change Will Have Marginal Impact
The federal Department of Health, Disability and Ageing defended the reform as a simpler and more equitable way to distribute support.
It estimates the change means about 44,000 adults aged 65 and over will not be insured in 2028–29. However, it expects the total insured population to continue growing, albeit at a slightly slower rate.
“The evidence indicates the higher age-based rebate has a limited marginal effect on participation,” the department said.
It estimates affected policyholders will pay an average of $252 more a year and says lower-cost Silver Plus products can still cover cataract surgery, dialysis, and joint replacements.
The department acknowledged some lower-income households face financial pressure but argued any effect on hospital activity would be marginal.
Even if the projected reduction in private hospital activity transferred entirely to the public sector, it would represent less than 1 percent of projected public hospital separations in 2028–29.
The government also pointed to an additional $25 billion for public hospitals and said the rebate savings would fund residential aged care, home support, and dementia care. The reform would be evaluated after two years.
