A proposed overhaul of private health insurance rebates for older Australians has divided a Senate committee, with concerns that the changes could increase costs for pensioners and people on fixed incomes.
The government estimates the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 would save $3 billion for aged care initiatives, including additional residential aged care beds and Support at Home packages. The committee recommended passing the bill, arguing that rebates should be based on income rather than age.
However, Coalition and Greens senators opposed the legislation in its current form, warning that higher insurance costs could force older Australians to downgrade their cover or cut spending on essentials.
A Council on the Ageing Australia survey of 1,332 supporters aged over 65 found one in three respondents would cancel or change their private health insurance if the additional age-based rebate were removed. Among those intending to retain their cover, 34.2% said they would reduce spending elsewhere.
Supporters of the changes argue the savings could ease pressure on public hospitals and help fund aged care. Critics warn that people who leave private insurance could instead rely on the public health system.
If passed, the changes would take effect on 1 April 2027.