Introduction by Croakey: Independent MP Dr Monique Ryan, the Shadow Minister for Health and Aged Care Senator Anne Ruston and Senator Jacqui Lambie stood together this week to push back against Federal Government plans to drop higher private health insurance rebates for over-65s.
Ryan released an analysis by the Parliamentary Budget Office that she had commissioned, which she said found that $1.6 billion of the total budget savings of $3 billion by 2029-30 would be met by the nearly 1.5 million age pensioners who hold private health insurance.
Croakey readers may not be surprised to learn that health economist Professor Stephen Duckett AM, who supports the reform, has written to the Parliamentary Budget Office, seeking clarification of the assumptions underpinning their analysis.
Dr Luke Slawomirski, a health economist, policy analyst and Senior Postdoctoral Research Fellow at the Australia Institute, told Croakey that “the PBO work changes nothing”.
“It simply tells us that pensioners receive about half of the age-based uplift,” he said.
“It doesn’t tell us that removing it will cost the health system more than it saves. More specifically: how much valuable additional care the rebate actually buys, and whether the same public money could produce greater health benefits elsewhere.”
Below is the text of Slawomirski’s recent presentation to a Senate Community Affairs Committee inquiry, explaining his support for the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026.
Luke Slawomirski writes:
Here is a short passage from Niccolo Machiavelli’s The Prince:
“There is nothing more difficult than introducing a new system. For the initiator has the enmity of all who profit by preserving the existing arrangements, but merely lukewarm defenders in those who gain by the new ones.”
It’s clear that submissions supporting this Bill are in the minority – but they have one thing in common: no vested interest in maintaining the status quo.
I get it. There’s billions of dollars at stake – that’s billions in revenue and income. Corporations and lobbies fighting the Bill are simply doing their job.
The Australia Institute has no financial stake in private health.
And we support this Bill. Having examined the available evidence, our position is that removing the age-based uplift to an already generous taxpayer subsidy – and re-allocating these funds to essential services – makes sense in terms of equity and efficiency.
Challenging the claims
But it’s important to challenge three claims that tend to permeate the deliberations here. I find it concerning that these claims seem to be taken as self-evident – despite a lack of evidence. This can jeopardise the outcome of the Inquiry.
Claim 1: That we have the world’s best health system.
This is far from settled. Yes, we do some things very well – for example, our survival rates after stroke and heart attack are among the best in the OECD … although it’s useful to note that 85 percent of these cases are treated in public hospitals.
But if we agree that the primary objective of a health system is to keep people healthy, Australia is low down on the league table. Two recent studies – published in highly respected medical journals – placed us second worst in the world on how long the average person lives in ill health.
Unnecessary, avoidable hospitalisations cost the taxpayer $7.7 billion p.a. And let’s keep in mind that – at 10.3 percent of GDP – our health expenditure is in the top quartile of countries. Twenty years ago, we were in the bottom half.
If we focus on disadvantaged populations – as several submissions have – data from the Institute of Health and Welfare provide a reality check.
Australians on income support are eight times more likely to die prematurely than others – that’s after adjusting for age.
The geographic divide isn’t as stark but still concerning. People living in remote areas are twice as likely to die prematurely than those living in the city; they’re also twice as likely to be admitted to hospital for avoidable causes.
But Medicare data show the reverse pattern: in 2024, expenditure on specialist services was $29 per person living in a city. In remote Australia it was $14.
Claim 2: That every elective procedure performed privately would be performed in a public hospital
It wouldn’t because private admission thresholds are lower – this is an established phenomenon. And the health funds themselves will tell you that dubious, low-value care in the private sector is a key driver of premiums.
Nor is the private sector more efficient – and this is a fundamental misconception – not just for the reason I just mentioned but because of the vast differences in casemix, social disadvantage and emergency admissions.
Claim 3: That private health relieves on public hospitals
There’s little evidence to suggest it does. Private health insurance doesn’t cover emergency department presentations, and when it comes to elective care, there’s a very simple reason: clinicians providing these procedures can’t be in two places at once.
Evidence matters
Good policy is based on solid, impartial evidence … not received wisdoms or feelpinions.
I was aghast hearing someone invoke the ‘pub test’ last week. And I was equally astonished to read an editorial in The Australian newspaper calling private health insurance a ‘public good’ … which, by definition, it cannot be.
The fundamental question before us is whether the taxpayer money to fund the uplift can be put to better use. We believe that it can and that it should. It’s an inefficient, poorly targeted subsidy.
If I were a fiscally responsible, small government politician, I would vote for this Bill.
But let’s bring it back to the consumer. There’s no doubt that people will be affected by this modest change. Some will relinquish or downgrade their cover.
But it’s these very people – pensioners and those living in regional and remote Australia – who also stand to benefit from direct investment in essential public services like aged care.
That’s why we support this Bill.
• Watch the inquiry hearing here.
See Croakey’s archive of articles on private health insurance
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