Labor will press ahead with a plan to cut private health insurance rebates for Australians aged 65 and over, despite backlash from insurers and older Australians worried about the cost. The change would bring the rebate for that age group into line with people under 65.
Industry estimates say about three million people could be affected, with Labor warning the shift could add up to $250 a year to private health insurance bills for some older policyholders. The government has also estimated about 44,000 people could drop their cover if the plan goes ahead.
Health Minister Mark Butler announced the move at the National Press Club on 22 April, saying it would recoup $3m over four years and the money would be used to increase the number of beds in aged care homes. On Tuesday, he told the ABC the government would keep moving ahead with the changes despite community concern.
Butler said he understood the political cost. “I recognise this is an unwelcome change for many older Australians,” he said. But, he added, “at a time where we need to find every dollar we can to plough into aged care services, continuing to pay people a higher subsidy for their private health insurance not on difference in income, but difference in age, was just difficult to sustain.”
Dr Stephen Duckett said the higher rebate for people aged 65 and over, first introduced by the Howard government in 2004, had done little to change pressure on the health system when it was created and would do little if removed now. “There’ll be almost no impact on the public health system,” he said. “Even the government’s projections of the number of people who might drop health insurance is quite small.” He added: “It had more or less no impact when it was introduced, so it’s going to have almost no impact when it’s taken away.”
Duckett said the 44,000 people the government thinks could abandon their insurance were spread across eight states and territories, which he said meant there would be no major shock to hospital demand in any one place. That view cuts against the argument from critics who say the policy will make coverage less affordable for older people and push more pressure onto households already stretched by rising prices.
The Council on the Ageing said it had serious concerns about the extra burden the change would place on older Australians already absorbing the rising cost of living. The rebate reduction would remove a higher subsidy based on age and align all policyholders on the same footing, but the backlash shows the government is moving ahead with a politically difficult change in the name of funding aged care.
