The Australian Medical Association is warning proposed changes to private health insurance rebates for older Australians could increase pressure on public hospitals and undermine already struggling private hospitals.
In its submission to the Senate Community Affairs Legislation Committee inquiry into the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026, the AMA has urged the government to protect older Australians on lower incomes by exempting those on the Medicare Levy Surcharge base-tier incomes from the proposed changes.
AMA President Dr Danielle McMullen said the AMA supported the government’s efforts to secure additional funding for aged care, but this should not come at the expense of older Australians’ access to healthcare.
“The AMA welcomes the government’s recognition that aged care requires greater investment, but we do not believe older Australians should be forced to pay for that investment through higher private health insurance costs,” Dr McMullen said.
“Many older Australians have maintained private health insurance for decades. Removal of the higher rebates for people aged 65 and over, particularly those who are on lower incomes, risks making that cover less affordable at a time when they are most likely to need healthcare.”
The government has indicated savings from the measure would help bolster funding for aged care. However, the AMA is concerned the projected savings fail to account for the broader costs the measure is likely to impose across the health system.
“The government’s own analysis acknowledges this measure is likely to reduce private health insurance participation and increase demand on public hospitals,” Dr McMullen said.
“If older Australians are forced to leave or downgrade their cover, that care does not simply disappear. It is likely to shift to public hospitals that are already under enormous strain, further reducing timely access to care for patients. Some people may also delay GP visits, specialist appointments or diagnostic tests to help absorb higher insurance costs, potentially worsening their health outcomes.”
Dr McMullen said the proposal could also have serious consequences for private hospitals, particularly smaller and regional facilities already operating under significant financial pressure.
“Private hospitals play a critical role in Australia’s health system, and many are already struggling with narrow margins,” Dr McMullen said.
“A reduction in private hospital activity will place further pressure on facilities that are already under significant strain, particularly in regional areas where healthcare options are already limited. Once a private hospital service is lost, or specialists leave private practice, it can be very difficult to rebuild that capacity. That has long-term consequences for patient access and the resilience of our health system.”
The AMA has called on the committee to recommend an amendment to the Bill to preserve existing rebate arrangements for older Australians on Medicare Levy Surcharge base-tier incomes.
