Study says ending extra health rebate for seniors saves money without hurting hospitals

Researchers from the University of Melbourne examined a decade of tax records for around 130,000 Australians to assess the impact of ending the age-based private health insurance rebate. They concluded that the rebate has minimal influence on whether people hold private cover, which is mainly determined by personal health needs and long-standing habits. The analysis predicts that between 14,821 and 42,498 seniors may relinquish their policies, a range close to the government’s estimate of 44,000.

By eliminating the extra rebate, the government could save between $730 million and $940 million annually by 2028-29, funds the health minister plans to allocate to aged-care. While the Australian Private Hospitals Association and the Australian Medical Association warned of possible strain on public hospitals, the health minister rejected those concerns, saying no material impact is expected. The Australia Institute and its researchers also highlighted that subsidising private insurance does not significantly relieve public hospital pressure, noting that both sectors share the same clinical workforce.