A new submission to a Australian Parliamentary Inquiry has said scrapping the extra private health insurance rebates given to older Australians would make the nation's health system fairer.
In its 8-page submission “Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026” to the Community Affairs Legislation Committee, the Australia Institute describes the plan to remove higher rebates for over-65s as “modest and equitable”. It says claims that the changes would force older Australians to relinquish their cover in droves are exaggerated.
The report authored by health economist Dr Luke Slawomirski says the changes would save billions of dollars over time, which would be better spent on aged care, primary care and preventative health measures.
The main points of the submission by the Australia Institute include:
• When you take into account direct subsidies and indirect costs, private health insurance rebates cost the taxpayer more than A$12bn ($8.65bn) a year, yet there is little evidence to prove they achieve their primary goal of taking pressure off the public health system.
• Removing the extra age-based system is fair, because younger, healthier Australians already subsidise older, sicker Australians. Those who currently hold health insurance are more likely to be able to absorb a reduction in their rebate.
• Claims that removing extra rebates for older Australians would cause public hospitals to be overwhelmed are overstated.
• The money saved by providing fewer subsidies for private health insurance would be better invested directly in other areas of the health system.
Dr Slawomirski said, “Why should people on the same income receive different taxpayer subsidies simply because one of them is older?” Dr Slawomirski is a Senior Postdoctoral Fellow at The Australia Institute.
He said, “Private health insurance is already designed so younger and healthier people subsidise older and sicker people. An additional taxpayer subsidy based solely on age is difficult to justify.
Directly investing in things like aged care, primary care, dental and preventative health is a much better way to take pressure off public hospitals.”
“Public money should buy public value. Currently we have little evidence that the private health insurance rebate passes that test,” said Dr Slawomirski.