Warnings that changes to private health insurance rebates could overwhelm public hospitals are too simplistic, according to Luke Slawomirski, who argues the bigger pressure point is not insurance coverage but aged care bottlenecks.
Slawomirski, a senior postdoctoral research fellow at The Australia Institute, wrote in The Point that the debate around the proposed rebate change has focused too heavily on whether older Australians will drop private cover, and not enough on whether that would actually translate into a major new burden for public hospitals.
His view was issued after Health Minister Mark Butler told the ABC last week that the government would move ahead with a plan to remove the extra age-based rebate for Australians aged 65 and over. The change would bring their rebate into line with younger people on the same income.
The government said the savings would go to aged care, including more beds. Many affected policyholders could see premiums rise by a few hundred dollars a year, while some couples with more expensive cover could pay more.
Critics have warned that higher costs may push some older Australians to cancel or downgrade their policies, leaving the public system to absorb more patients. Slawomirski’s argument is that this assumes too much about how private health insurance interacts with the hospital system.
The proposal is estimated to lead around 44,000 people across Australia to drop their cover. Slawomirski said some people would likely leave or downgrade their insurance, but argued the effect on public hospitals would be limited.
“Private health insurance does not buy access to emergency departments,” Slawomirski said.
Private cover usually applies only after a patient has been admitted to hospital. A person who goes to a private emergency department can still face upfront charges of hundreds of dollars, plus the cost of tests and imaging, regardless of whether they are insured. That means many insured Australians are still likely to go to public emergency departments when they need urgent care.
Slawomirski also challenged the idea that cancelled private cover would automatically shift the same procedures into the public system. Public hospitals prioritise patients based on clinical need and apply different thresholds for treatment. They are also less likely to perform procedures considered marginal or low value.
“They won’t, all of a sudden, start performing the kinds of nice-to-have elective surgery that someone might only get if their insurance will pick up the bill,” Slawomirski said.
In his view, the more direct hospital pressure comes from older patients who remain in hospital even after they no longer need acute care because aged care places or community support are unavailable. That is where he said the proposed savings could matter.
“The savings made from changing the rebate will be used to instead fund something that does reduce hospital pressure: aged care capacity,” Slawomirski said.
The debate, then, is not only about whether older Australians will pay more for private health insurance. Slawomirski’s argument is that public money may do more to ease hospital pressure if it is directed toward aged care rather than higher rebates for private cover.
For him, the fear of public hospital chaos is overstated. The larger issue may be older patients stuck in hospital beds because the aged care system cannot take them, not older Australians leaving private insurance.
