A Senate committee recommended passing the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 on October 7, one day before consumer research revealed that nearly half of all Australians believe they could manage without private health insurance entirely.
For brokers, that second finding is not a curiosity. It is the objection waiting in your next client conversation.
The bill passed the House of Representatives on September 16, 2026, and proposes to remove the age-based private health insurance rebate from April 1, 2027. More than 3.002 million Australians aged 65 and over held private health insurance as at December 31, 2025, according to Private Healthcare Australia (PHA), the industry’s peak body. Nearly all of them would be affected.
The Senate has not yet voted. The floor debate is expected later in 2026. Insurers must lodge their 2027 premium applications with the government by mid-November before that vote occurs.
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Under the current structure, base-tier policyholders under 65 receive a rebate of 24.118%. Those aged 65 to 69 receive 28.139%, and those aged 70 and over receive 32.158%.
The bill removes the age-based uplift entirely. From April 2027, all policyholders receive the same income-tested rate regardless of age.
PHA calculates the change would increase premiums for affected policyholders by up to $600 per year, on top of the standard annual premium rise of 4.41% in 2026. PHA notes Gold hospital cover averaged a 13.3% increase that year, meaning older clients on top-tier products face compounding cost pressure before the rebate change is even factored in.
PHA CEO Dr Rachel David said the burden falls hardest on those least able to absorb it. “About 39% of Australians with private health insurance earn less than $55,000 a year. This includes more than 900,000 older Australians who will be affected by the government’s proposed changes,” David said.
She added: “There is a large cohort of older Australians with chronic conditions who rely on the private system and already devote a significant share of their limited incomes to healthcare. It is economically counterproductive to reduce the rebate and push high-needs patients out of private cover.”
Consumer research published on October 8, 2026, found that 47% of Australians were either very or somewhat confident they could rely solely on the public health system without private cover.
That figure will reach broker conversations. When it does, the response is not to dispute it; Medicare does cover serious and acute care. The more useful framing is what the public system does not reliably provide: timely access to elective procedures.
The Australian Institute of Health and Welfare (AIHW) reported in December 2025 that the national median wait for elective surgery from a public hospital waiting list was 45 days in 2024-25. Six percent of patients waited longer than a year. Cataract surgery, the most common elective procedure, had a median public wait of 106 days that year.
For older clients who have held private cover for decades and may be approaching the years when they are most likely to need joint replacements, cataract surgery, or specialist treatment, that is the concrete cost of confidence in Medicare. Framed that way, the 47% figure becomes a conversation starter rather than a concession.
PHA projects 62,000 people will drop their cover if the bill passes as drafted, against the government’s estimate of 44,000. PHA’s position as the industry’s peak body means its figures carry advocacy intent, and the gap reflects a genuine disagreement about how price-sensitive older policyholders are likely to be. A further 200,000 are projected to downgrade, predominantly from Gold to lower-tier products.
PHA estimates approximately 1.32 million aged pensioners currently hold private health insurance, the cohort most exposed to the change and, on PHA’s modelling, most likely to act on cost pressure.
The Australian Prudential Regulation Authority’s (APRA) September 2025 quarterly data showed hospital treatment coverage at 45.5% of the population and general treatment coverage at 55.2%, both up marginally from the June 2025 quarter.
That growth occurred before the proposed rebate change entered the pricing cycle. Whether it continues after April 2027 is the question insurers are currently trying to answer, and the one that will shape 2027 premiums whether or not the bill ultimately passes.
Read next: PHI rebate forecasts diverge on older Australians leaving cover
Premiums for 2027 are being finalised now. The Senate vote comes later. That sequencing, not the legislation itself, is what makes this a broker issue today rather than a legislative issue to monitor.
Clients aged 65 and over should understand what a four or eight percentage point rebate reduction means for their annual costs. Where a client is on Gold cover and considering whether that tier remains appropriate, the time to work through that question is before April 2027 pricing takes effect, not after.
For clients who raise the 47% confidence figure or question the value of their cover, the relevant question is not whether Medicare exists, but whether it delivers what they currently have: a choice of specialist, a predictable wait, and access to the procedures most common in their age group. That conversation is more productive before a premium increase lands than after one prompts a cancellation call.
The legislative outcome is still uncertain. The November deadline is not.
