When direct subsidies and indirect costs are taken into account, private health insurance rebates cost the taxpayer more than $12 billion a year, yet there is little evidence to prove they achieve their primary goal of taking pressure off the public health system.
Fri 11 Sep 2026 08.22 AEST
Photo: AAP Image/Michael Currie
A submission to the committee reviewing changes to the Private Health Insurance Rebate Bill has argued a plan to scrap the extra private health insurance rebates given to older Australians would make the nation’s health system fairer.
Written by health economist Dr Luke Slawomirski, who is a Senior Postdoctoral Fellow at The Australia Institute, it says the plan to remove higher rebates for over-65s is “modest and equitable” and says claims that the changes would force older Australians to relinquish their cover in droves are exaggerated.
The paper argues that when direct subsidies and indirect costs are taken into account, private health insurance rebates cost the taxpayer more than $12 billion a year, yet there is little evidence to prove they achieve their primary goal of taking pressure off the public health system.
It also argues that removing the extra age-based system is fair, because younger, healthier Australians already subsidise older, sicker Australians.
Meanwhile, those who currently hold health insurance are more likely to be able to absorb a reduction in their rebate.
“Why should people on the same income receive different taxpayer subsidies simply because one of them is older?” Dr Slawomirski said.
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“Private health insurance is already designed so younger and healthier people subsidise older and sicker people. An additional taxpayer subsidy based solely on age is difficult to justify.”
Dr Slawomirski argues that money saved by providing fewer subsidies for private health insurance would be better invested directly in other areas of Australia’s health system.
“The Commonwealth spends more than $12 billion every year subsidising private health insurance. For that kind of money, taxpayers should expect clear evidence that the policy improves health or meaningfully helps public hospitals,” he said.
“Public money should buy public value. Currently we have little evidence that the private health insurance rebate passes that test.”
Dr Slawomirski is due to give evidence before the Senate Committee on Friday afternoon.
