Mark Butler defends Labor’s private health rebate cuts as Coalition warns of longer public hospital waits

The Albanese Government was forced to defend its controversial decision to wind back higher private health insurance rebates for older Australians, rejecting warnings the policy will push more patients into the public hospital system as it argues the savings are needed to fund aged care.

The changes, announced in this week’s Budget, will remove the age-based loading on private health insurance rebates from January 2027.

Instead, rebates will be based solely on income, meaning many Australians aged over 65 will receive a smaller government subsidy towards their premiums.

Health Minister Mark Butler insisted government modelling showed the changes would have only a limited effect on private health insurance membership, despite growing concerns from state governments and the insurance industry that the policy could increase pressure on already stretched public hospitals.

“Yeah, we’ve done some modelling through our officials, and it’s indicated there’ll be a very marginal impact on private health insurance membership, which is growing all the time anyway,” Mr Butler told Sunrise.

“I’m a little surprised, frankly, that the state governments have swallowed the rather self-serving modelling that the insurance industry itself is putting out there.”

Mr Butler said the Government had been forced to make difficult Budget decisions as demand for aged care services continued to grow with Australia’s ageing population, arguing every dollar saved would be reinvested into the sector.

“We have to find more money for age care services. So every dollar we save through this measure will be invested in more age care beds, better care, more age care, home care packages,” he said.

He also rejected criticism that the changes unfairly targeted older Australians, saying households on the same income should receive the same level of taxpayer support regardless of age.

“But your rebate is cut,” Sunrise host Natalie Barr said.

“We’re going back to the position where people get that subsidy based on their income, and every dollar we save here is going into the critical age care services that we need to continue to build for older Australians,” Mr Butler replied.

Deputy Leader of the Opposition Jane Hume labelled the measure an “$11 billion tax” on older Australians, accusing Labor of breaking an election promise by failing to foreshadow the policy before voters went to the polls.

“This is a tricky and sneaky, and mean spirited, $11 billion tax on older Australians,” Ms Hume said.

She warned many retirees on fixed incomes would be forced to abandon private health insurance, increasing demand on public hospitals and lengthening waiting lists for all Australians.