Ending private health rebate for Australians 65 and over is ‘good policy change’, report co-author finds
News Source
•Wed, 26 Aug 2026 15:00:17 GMT
📰 What Happened
The federal government has pushed back against concerns that removing the higher private health insurance rebate for Australians aged 65 and over could add pressure on public hospitals. Health economists from the University of Melbourne analysed a decade of tax data for roughly 130,000 people and concluded the change is a “good policy”. Their modelling suggests only 0.1–0.4% of the total insured population would actually ditch their cover, while the government could save as much as $940 million a year. The measure is scheduled to take effect in April 2027 and would make the rebate depend solely on income, matching the rules that already apply to people under 65.
🔍 The Backstory
Currently, Australians aged 65 and over receive a larger rebate on their premium than someone under 65 on the same income, and the rebate rises again for those 70 and older. The higher rebate was designed as an incentive to keep older Australians in private cover and ease demand on Medicare and public hospitals. The reform lands against a backdrop of private health insurance premiums just posting their biggest hike in a decade, sharpening affordability concerns. The Ottawa analysis questions whether the age-based incentive is well targeted, arguing the potential savings outweigh any marginal loss of coverage.
🎯 Why It Matters
A change that could save taxpayers close to a billion dollars a year while nudging only a tiny fraction of policyholders out of cover tests whether an entrenched healthcare entitlement can be trimmed without spilling over into the public system.
The federal government has pushed back against concerns that removing the higher private health insurance rebate for Australians aged 65 and over could add pressure on public hospitals. Health economists from the University of Melbourne analysed a decade of tax data for roughly 130,000 people and concluded the change is a “good policy”. Their modelling suggests only 0.1–0.4% of the total insured population would actually ditch their cover, while the government could save as much as $940 million a year. The measure is scheduled to take effect in April 2027 and would make the rebate depend solely on income, matching the rules that already apply to people under 65.
Currently, Australians aged 65 and over receive a larger rebate on their premium than someone under 65 on the same income, and the rebate rises again for those 70 and older. The higher rebate was designed as an incentive to keep older Australians in private cover and ease demand on Medicare and public hospitals. The reform lands against a backdrop of private health insurance premiums just posting their biggest hike in a decade, sharpening affordability concerns. The Ottawa analysis questions whether the age-based incentive is well targeted, arguing the potential savings outweigh any marginal loss of coverage.
A change that could save taxpayers close to a billion dollars a year while nudging only a tiny fraction of policyholders out of cover tests whether an entrenched healthcare entitlement can be trimmed without spilling over into the public system.