Seniors with Private Health Insurance (PHI) have breathed a sigh of relief as the Senate voted to “kill the bill” to remove the higher PHI Rebate for Australians aged 65 and over.
A motion, brought by Shadow Minister for Health and Aged Care, Senator Anne Ruston, and Senator Jacqui Lambie, was supported by senators across the chamber taking the bill off the Senate’s agenda.
“Common sense has prevailed. The cut to the higher Private Health Insurance Rebate for people aged 65 and over has been hit on the head,” NSA Chief Executive Officer Mr Chris Grice said. “Older Australians were facing significant increases in the cost of health insurance. No one supported the cut to the higher rebate, except for the government.”
“NSA has been leading the fight against this change since the cut was announced by the Health Minister ahead of the budget. We welcome the support of the Opposition and crossbench parliamentarians in opposing and killing the bill. We thank the tens of thousands of older Australians who have supported NSA’s campaign to oppose this change.”
Senator Anne Ruston, Senator Jacqui Lambie, Dr Monique Ryan MP, Rebekha Sharkie MP and Dr Anne Webster MP have led the charge within parliament to oppose the bill, supported by many others.
Fight isn’t over
While the move killed the bill in its current form, the government recommitted to changing the rebate by reintroducing the same bill into the lower house the next day.
Defending the policy, Minister Butler stated, “This is an absolute travesty that flies in the face of any of the members of the Coalition’s professed commitment to sound budget management, and flies in the face of, I thought, what was a clear understanding across the parliament of the need to fund better aged care services.”
Arguments that savings were needed to pay for aged care appear shaky, after it was announced the government had underspent on aged care by $1.4 billion in 2025-2026, much more than the $870m expected to be saved from the cut to the higher PHI rebate in the first full year.
National Seniors Australia now looks to the Greens to show leadership as the government negotiates the new bill. In this regard, we need the Greens to say no. Enough is enough.
“There is significant uncertainty about the impact of the cut on private and public hospitals and on the health of older Australians. Supporting seniors to retain PHI will ensure that our ageing population remains healthier for longer, alleviating pressure on our broader health and aged care systems. Government needs to see this as an investment in the future, not a burden on the budget,” Mr Grice said.
NSA survey shows greater impact on seniors
A new National Seniors Australia (NSA) survey suggests the Federal Government has substantially underestimated how many older Australians could drop or downgrade their private health insurance (PHI) if proposed rebate cut proceeds.
The changes would remove the higher PHI Rebate currently available to eligible people aged 65 and over. From 1 April 2027, the rebate would instead be calculated on income alone, regardless of age.
The legislation has passed the House of Representatives and is now before the Senate, where its fate rests with the Greens.
The government expects the measure to save around $3 billion, which it says will support aged care commitments. Its modelling indicates that around 44,000 Australians would drop their private health insurance because of the change.
Of those surveyed, 15.6% said their most likely response to the additional premium cost would be to drop their private health insurance, while 16.6% said they would downgrade their cover.
Another 20.3% would reduce other spending and 21.8% would draw on savings.
Full-rate pensioners appear particularly vulnerable. Among pensioners surveyed, 20.5% said they would most likely drop their insurance, and 19.5% said they would downgrade it.
Among self-funded retirees, 30% said they would drop or downgrade their cover, while 28.6% said they would draw on savings to meet the increased cost.
Previously undisclosed Department of Health modelling released under Freedom of Information this week, estimates that the number of older Australians dropping their cover would grow to about 78,000 by 2029-30.
According to the departmental briefing, the publicly cited figure of 44,000 represents only “the initial effect of the policy at a point in time”.
Shadow Minister for Health and Aged Care, Senator Anne Ruston, said the documents showed the government’s own longer-term estimate was almost twice the figure Health Minister Mark Butler had used publicly.
Senator Ruston said about 1.2 million pensioners would be affected by changes to PHI, including about 700,000 full-rate pensioners.
“If pensioners can’t afford to keep their cover, they don’t stop needing care. They put off treatment, get sicker, and end up on public hospital waiting lists that are already far too long,” she said.
Decision rests with the Greens
The new bill’s future is now effectively in the hands of the Greens.
The Coalition has committed to opposing the legislation, meaning the Federal Government needs Greens support for it to pass the Senate.
ABC News reported last week the Greens are considering possible amendments, including an exemption for pensioners.
Department of Health figures obtained by the ABC show more than two million of the older Australians affected by the changes have annual incomes below $37,000.
NSA has welcomed opposition to the rebate cut but maintains the fairest approach is to reject the change for all older Australians.
Exempting pensioners would protect many of those least able to absorb higher premiums, but self-funded retirees on modest incomes could still face difficult choices.
The evidence before the Senate shows this is not simply a budget measure. It could determine whether hundreds of thousands of older Australians retain the health cover they have paid into for much of their lives, downgrade it, or leave the private system altogether.
The Greens now have a crucial opportunity to prevent those consequences.
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