Hundreds of thousands of older Australians are expected to lose access to private health services, including common surgical procedures and dental care, under the Government's proposal to slash the higher health insurance rebate for people aged 65 plus.
In a submission to the Senate inquiry examining the Government's legislation, Private Healthcare Australia said more than 3 million older Australians face much higher health insurance costs under the proposal, which will cause up to 62,000 to drop their cover and another 200,000 to downgrade next year.
This will mean many people losing access to common life-enhancing procedures for older people, including cataract procedures to improve vision, and hip and knee replacements to reduce pain and improve mobility. Waiting lists for these procedures can stretch to years in the public hospital system.
In 2025, private health insurance contributed $11.8 billion towards 2.8 million hospital episodes for Australians aged 65 plus. Around 67 per cent of planned surgery occurs in the private sector, including most orthopaedic surgery and cataract removals.
PHA CEO Dr Rachel David said the debate about the rebate needs to focus on what happens to people when they can no longer afford their health insurance, including 1.32 million aged pensioners currently investing in it.
"This is about security and fairness for older people who have been investing in health insurance usually for decades on the basis they are likely to need it for costly hospital care in their 60s, 70s and beyond," she said.
"If someone loses their health cover and needs a hip or knee replacement, they will likely end up on a very long public hospital waiting list. And while they wait, they're at greater risk of falls and other problems that will reduce their quality of life.
"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."
PHA's submission highlights the significant role private health insurance plays in funding healthcare for older Australians outside hospital care. In 2024-25, health funds paid more for dental care than all Australian governments combined, and for people aged 65 plus, health funds paid:
- More than $900 million for 13 million dental services.
- $1.6 billion for 25 million ancillary services, including physiotherapy, podiatry, hearing aids and other allied health care.
Dr David said access to these services was an important part of maintaining health and independence as Australians age.
"These are not luxuries. Dental care, optometry and allied health treatment can make a real difference to people's health, mobility and quality of life.
"The public debate has understandably focused on hospital care, but millions of older Australians are using health insurance 'extras' for everyday health needs."
PHA estimates the proposed changes could add almost $260 million a year in additional public hospital expenditure for state and territory governments. But the bigger concern is whether public hospitals have the capacity to absorb additional demand.
"Public hospitals already have significant waiting lists for planned surgery. Adding more patients who have lost access to private care will put further pressure on those waiting lists for everybody relying on the public system, including younger people," Dr David said.
"The private health system currently takes a lot of pressure off the public system, thanks to 45% of Australians investing in hospital cover as part of their health insurance. This gives them access to rapid care in private hospitals should they need it".
PHA is also concerned about the impact on regional healthcare, where private hospitals can be an essential part of local health services. If older Australians drop their cover and activity falls, some regional private hospitals could become unviable, reducing local healthcare options and placing further pressure on public hospitals.
PHA's submission recommends the Government reconsider the Bill in its current form. If the Government remains committed to achieving savings, PHA recommends targeting the rebate reduction towards higher-income older Australians while protecting lower-income Australians from the full impact.
PHA has also proposed measures to help fund the savings required by Government, including reducing excessive private medical device prices and increasing the Medicare Levy Surcharge for higher-income Australians who choose not to take out health insurance.
Dr David said the Senate inquiry provided an opportunity to consider the full consequences of the proposed changes and other ways to generate revenue in a more equitable way.
"We recognise the Government is looking for savings and has to make tough decisions, but there are better ways to achieve this than making healthcare more expensive for millions of older Australians, particularly pensioners and people on low incomes.
"The Senate inquiry should look beyond the immediate budget saving and consider what this policy means for older people, their families, private hospitals and the public health system."
"We need to make sure older Australians who have sacrificed to pay for health insurance for decades can continue to access private healthcare when they need it."
You can read about expected price rises for older Australians here .
