Mark Butler (Hindmarsh, Australian Labor Party, Deputy Leader of the House) | Hansard source

I move:

That this bill be now read a second time.

The Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 will address intergenerational inequity, simplify, and better target the rebate for private health insurance premiums.

Currently, the government provides a rebate that supports Australians to take up and to hold private health insurance.

Each year, government invest approximately $8 billion in the rebate to help keep private health insurance more affordable and to take pressure off our public health system.

In the election environment of 2004, with a boom economy driven by global economic activity, the Howard government increased the private health insurance rebate, but only for people aged 65 and above. In 2026, that is difficult to defend.

The higher rebate for people aged 65 and above means two houses on the same income receive different levels of government rebate based only on their age. This is in addition to older people's health insurance claims already being cross-subsidised by younger policyholders under community rating, which means everyone pays the same premium for the same policy, regardless of their gender or their health status.

Older Australians are more likely to retain private health insurance, and they receive significantly higher benefits on average than younger Australians. This means the inequitable targeting of the rebate simply does not align with its purpose to incentivise take-up.

And the current model is simply not the best way to spend taxpayers' dollars on behalf of older Australians when there is a significant need to expand access to aged-care services.

Therefore, to re-establish intergenerational equity, and to better target and simplify the rebate, this bill will amend the Private Health Insurance Act 2007, removing the higher rebates paid for people aged 65 and over. The rebate will remain means tested—a change Labor made in 2012 and those opposite opposed—paid at a higher rate for those on lower incomes.

The rebate changes, if passed by the parliament, will take effect on 1 April 2027.

I understand that this will not be a welcome decision for some, but it is the necessary and right thing to do.

It will mean that two households next door to each other on exactly the same income will receive the same support from government for their health insurance—regardless of age.

It also allows us to invest $3 billion in critical funds to deliver more residential aged-care beds, more Support at Home packages, shorter wait times and better care for older Australians.

This investment will:

The change will impact approximately 3.2 million people aged 65 and over who have a taxable income below the rebate cut-off. It's expected the average increased premium for those impacted older Australians will be around $250 per year—or less than $1 per day. For some older Australians who choose more expensive policies, that increase may be higher.

It's expected that the number of older Australians with health insurance will continue to increase, including people aged 65 and above. It's estimated there will be about 44,000 fewer people aged 65 and over insured by 2028-29 than if the rebate had remained unchanged. That is 0.4 per cent fewer insured people than otherwise expected, in a sector that is growing on average by two per cent per year, or five times that amount.

This is a relatively low change in participation compared with the volume of services in hospitals, which means the impact on hospital admissions is expected to be marginal.

The bill will implement the rebate change by amending Part 2-2 of the Private Health Insurance Act 2007 so the rebate calculation applies in the same way for people aged 65 and above as it does for those aged under 65.

The bill will also make a technical amendment to the Age Discrimination Act 2004, removing a reference to an exemption previously required for the discriminatory operation of those higher rebates for older Australians, protecting the Commonwealth, as they did at the time, from legal action from younger Australians based on the obvious differential treatment based on age.

While this will remove the current preferential rebate for older Australians, they will continue to be supported through the rebate of up to 24 per cent off their premiums. They'll be supported through community rating and through indexation of the rebate, which this government reintroduced, of course, after it was frozen under the previous Liberal government. All of this will help keep private health insurance more affordable.

The Australian government has to balance its support for privately insured patients with the funding it provides right across the health, disability and aged care systems. Savings from this rebate change will provide important support for older people through improvements that are absolutely necessary to aged care. This decision reflects responsible budget management in challenging times.

The government will invest the $3 billion in estimated savings from this measure in delivering more aged-care beds, more packages, and better care for older Australians.

This will enable more people to access aged care, address delayed discharge from hospital and provide dignity and care to older Australians towards the end of their lives. Reinvesting the savings from the rebate in aged care capacity will relieve pressure on the public hospital system.

Although the rebate change is not expected to have a substantial impact on private hospitals, the government does recognise that some private hospitals are experiencing ongoing viability concerns. We are considering a range of reform options identified in consultation with the sector to modernise private health and to better support the public-private health system that has made Australia's health system one of the best in the world. I commend the bill to the House.

Debate adjourned.

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