Private health insurers are warning that proposed Federal Government changes to the private health insurance rebate for older Australians could place regional private hospitals under significant pressure, with concerns some facilities may struggle to remain viable if large numbers of seniors drop or downgrade their cover.
Peak industry body Private Healthcare Australia said the changes would reduce the rebate currently available to many Australians aged over 65, increasing out-of-pocket costs for older policyholders and potentially forcing thousands to reconsider whether they can afford private cover.
The proposed changes form part of the Albanese Government’s broader budget measures and would remove the higher age-based rebate rates currently available to Australians aged 65 and over, aligning them with the standard rebate available to younger Australians in the same income tier. The changes are expected to begin from April 2027, subject to legislation.
According to Private Healthcare Australia, more than three million Australians would be affected by the changes, including more than 400,000 pensioners who currently hold private health insurance.
The organisation said older Australians on low or fixed incomes could face steep premium increases as a result. It estimates Australians aged 70 and above with Gold hospital cover could see premiums rise by as much as 21 per cent from next April, equivalent to around $807 a year for an individual or $1,614 for a couple.
“Regional communities will be among the hardest hit if these changes proceed,” said Dr Rachel David.
“In many country towns and regional centres, the local private hospital is not a luxury, it is an essential part of the health system.
“If activity drops significantly because older Australians can no longer afford their cover, some private hospitals will struggle to remain viable. That would mean fewer local healthcare options and more pressure on already stretched public hospitals.”
Current government rebate settings provide higher support for older Australians, with people aged 65 to 69 receiving a higher rebate than those under 65, and Australians aged 70 and over receiving the highest rebate tier.
Private Healthcare Australia said the Government has forecast that around 44,000 older Australians will leave private health insurance as a result of the changes, though the assumptions behind that modelling have not been publicly released.
Health funds are also concerned about a potentially larger group of older Australians who may not cancel their cover altogether but instead downgrade to cheaper policies offering fewer services.
“That could mean many older Australians losing cover for procedures such as joint replacements or mental health treatment, which are included in Gold policies,” Dr David said.
“Patients who can no longer access treatment through the private system may instead end up joining public hospital waiting lists, creating additional strain on regional public hospitals already under pressure.”
Private Healthcare Australia said it had identified a number of regional private hospitals where more than 70 per cent of privately insured patients are aged over 65, making them particularly exposed to any drop in senior participation.
Hospitals identified as being of concern include:
In Queensland, Eden Private Hospital, Nambour Selangor Private Hospital, St Stephen’s Hospital, Hervey Bay Surgical Hospital and Noosa Hospital.
In New South Wales, Forster Private Hospital, Border Cancer Hospital, Mayo Private Hospital, Toronto Private Hospital, St Vincent’s Private Hospital Lismore, Figtree Private Hospital, Berkeley Vale Private Hospital, Nowra Private Hospital, Port Macquarie Private Hospital and Shellharbour Private Hospital.
In Victoria, Beleura Private Hospital, Maryvale Private Hospital and Mildura Health Private Hospital.
Dr David said there were also concerns for Tasmania, which has one of the oldest populations in the country.
“In some areas, losing local private hospital capacity could force patients to travel many hours for surgery, rehabilitation or specialist treatment,” she said.
“These hospitals support local jobs, local specialists and local healthcare services. Once services are lost in regional Australia, they can be very difficult to restore.
“We are urging the Government to carefully consider the unintended consequences of these changes before the Budget is handed down.”
