Older Australians who drop or downgrade their private health cover could end up on public hospital waiting lists, specialist doctors have told a Senate inquiry.
The Australian and New Zealand Society for Vascular Surgery (ANZSVS) gave evidence to the Senate Community Affairs Legislation Committee, along with the Royal Australian and New Zealand College of Obstetricians and Gynaecologists (RANZCOG).
The committee is examining the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026.
The bill cuts the higher private health insurance rebate for people aged 65 and over from April 1, 2027. After that, the rebate will be tied to income alone.
At the base income tier (under $105,000 a year for singles), the rebate for people aged 70 and over will fall from 32.158 percent to 24.118 percent. For people aged 65 to 69, it will fall from 28.139 percent.
The government expects to save $2.99 billion over four years. It says the money will go to aged care services, including 20 more specialist dementia care units.
It says the current rebate is “inequitable” because older people get more help than younger people on the same income.
Rebate Set to Drop by $252
The government’s impact analysis says the average rebate for people 65 and over will fall by $252 in 2028-29.
It expects 44,313 fewer insured people in the affected group that year than would otherwise be the case.
ANZSVS immediate past president, Dr. Mark Jackson, said many patients may switch to a cheaper policy rather than drop cover.
“That’s quite often marketed to these individuals by the health firms as a way of reducing their premiums,” he said.
Jackson said bronze policies do not cover vascular procedures, apart from cancer ports and lines.
“Those patients we can’t treat in the private sector,” he said, adding that the effect of downgrading “needs to be modelled [and] that actually hasn’t been up to this point.”
The government’s own analysis says its estimate of lost private hospital admissions does not take into account privately insured people who decide to downgrade their cover.
It admits downgrading “could result in a larger than estimated reduction.”
Private Healthcare Australia has estimated around 200,000 people would downgrade. It said most would move from Gold cover to policies with exclusions.
The possibility of downgrading is not theoretical.
More than 200,000 Australians downgraded their private health insurance in 2024 as households responded to rising premiums and cost-of-living pressures.
Amputation Risk
ANZSVS President Dr. Roxanne Wu said most vascular patients are older. Many have diabetic foot ulcers or blocked arteries.
“If these are not treated promptly, it can lead to amputation and limb loss,” she said.
The society’s submission (pdf) cites a study of over 1 million older patients with severely blocked leg arteries. For some, each extra 10-day delay beyond 30 days was linked to a 2.5 percent higher risk of major amputation.
For the 25 most common elective operations in 2024/25, half of public patients were admitted within 53 days. For patients funded by private insurance, it was 28 days.
Younger Australians Could Suffer
The society’s submission warns the bill could also hurt younger Australians who rely on public hospitals. Public hospitals treat the most urgent cases first, so more older patients could push back younger ones with less urgent problems, such as varicose veins and chronic wounds.
The submission said the policy “could have the unintended effect of disadvantaging younger Australians who do not have access to private health insurance.”
The society wants the bill dropped in its current form.
Consumer Behaviour Change Could Wipe Out Savings: RANZCOG
Meanwhile, the obstetricians body RANZCOG does not oppose the bill, but wants close monitoring once the changes start (pdf).
Brisbane obstetrician and gynaecologist Dr. Will Milford, appearing for the college, said surgery for pelvic organ prolapse and incontinence is mostly done in private hospitals. These conditions are not life-threatening, he said.
In public hospitals, patients “often receive sort of much longer waits or maybe indefinite waits for that care.”
Milford said it would take only “relatively small changes in people’s behaviours” to cancel out the savings the government expects.
He said patients whose care was delayed could need more costly treatment later. Otherwise, their care would be paid for through public hospitals instead.
Either way, “your savings risk evaporating,” he said.
The impact analysis says about 99 percent of the 3.2 million affected older Australians are expected to keep their cover. It says older Australians are “generally less responsive to price” because of the value they get from their insurance.
Even if all lost private admissions moved to public hospitals, they would add under 1 percent to public admissions in 2028/29, it says.
The health department did not consult on the specific changes because of budget confidentiality, the analysis says.
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