The Senate voted 38-23 on October 14 to remove the government’s bill cutting the private health insurance rebate for Australians aged 65 and over from its agenda. Health minister Mark Butler has said he will reintroduce it.
A motion from independent senator Jacqui Lambie and opposition health spokesperson Anne Ruston, supported by the Greens, discharged the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 from the Senate Notice Paper.
The motion was not a vote on the bill’s second reading, and it does not stop the government trying again.
The bill would remove the age-based rebate tiers from April 1, 2027. At the base income tier, those aged 65 to 69 receive 28.139% and those aged 70 and over receive 32.158%. Both would fall to the under-65 rate of 24.118%, according to the Department of Health. Income testing would remain. The government expected the change to save about $3 billion over four years, to be directed to aged care.
Finance minister Katy Gallagher told the Senate the government would take no lectures on spending, and accused the Coalition and the Greens of voting down $3 billion for aged care beds. She cited the Greens’ published policy of redirecting private health subsidies to the public system. Greens senator David Shoebridge had said the party backed trimming rebates but would not target pensioners, and would support the bill if they were exempt, the ABC reported.
Ruston called the result a win for older Australians. She said only five of 635 inquiry submissions backed the changes, and pointed to health department modelling released under freedom of information laws. That modelling estimates 78,000 older Australians would drop cover by 2029-30, compared with the 44,000 Butler had cited. The department said the two figures relate to different financial years and are uncertain.
Private Healthcare Australia (PHA) has projected that 62,000 would drop cover. Catholic Health Australia’s modelling suggests about one in five affected over-65s would change their level of cover within three years.
Butler called the outcome an “absolute travesty” and said he would reintroduce the same bill on October 15, the ABC reported. Ruston urged him to “take the hint”, and the Coalition has pledged to oppose any revival.
PHA chief executive Dr Rachel David welcomed the decision, saying health funds are ready to work with the government but that meaningful reform requires genuine consultation.
Estimates of how many people the change would affect vary by source. The department puts the number of older Australians affected at more than 3.2 million. Of those, Butler has said about 1.2 million are pensioners, while PHA says more than 1.5 million pensioners hold private cover.
The timing matters for pricing. Funds are expected to lodge their 2027 premium applications by mid-November, before the bill’s fate is settled, according to a recent report. If the bill passes, older members would face the rebate cut and the annual premium increase on the same date, April 1.
PHA estimates the combined effect for someone aged 70 or over on Gold hospital cover at about $807 a year, or $1,614 for a couple. The department puts the average extra cost of the rebate change for affected members at $252 a year.
For brokers and advisers with older clients, the more likely effect is downgrading rather than cancellation. A move from Gold to Silver hospital cover can remove joint replacements and cataract surgery, the procedures many older clients are most likely to need. Clients comparing products can use the government’s PrivateHealth.gov.au site.
The effect on hospitals was also raised. Shadow regional health minister Anne Webster said regional private hospitals would have faced added pressure. People aged 65 and over accounted for 48.8% of private hospital admissions in 2023-24.
Government-commissioned modelling by Finity Consulting found that removing the higher rebates would cut rebate spending by about $482 million, but add about $547 million in public hospital costs.
Independent MP Monique Ryan said Parliamentary Budget Office analysis she commissioned found half of the planned savings would come from older Australians least able to afford them. The ABC reported that about $1.6 billion of the savings would come from pensioners.
