What this year’s Federal Budget means for Australia’s private health system

By Dr Rachel David

This year’s Federal Budget will reshape Australia’s health system in ways that will be felt most directly by older Australians with private health insurance.

The Government has confirmed it will proceed with plans to reduce the private health insurance rebate for Australians aged over 65, redirecting around $3 billion towards aged care.

While investment in aged care is essential, shifting costs onto older Australians who rely most on private healthcare risks creating new pressures elsewhere in the health system.

At least 3 million Australians, including at least 400,000 pensioners, will face higher health insurance costs from next April.

We estimate seniors could see premiums rise by hundreds of dollars annually on top of normal premium increases driven by health inflation. Here’s how premiums are likely to change for older people with Gold (top hospital) cover from April next year:

• Individuals aged 65–69 with Gold cover: about $655 more per year
• Individuals aged 70+ with Gold cover: about $807 more
• Couples aged 65–69 with Gold cover: about $1,311 more
• Couples aged 70+ with Gold cover: about $1,614 more

Many of these people are Australians who have paid into private health insurance for decades, taking pressure off public hospitals. The timing of this is unfortunate given that in most States and Territories public hospital waiting lists have never been worse.

We will continue advocating for low-income earners – including pensioners and those earning under $55,000 – to be exempt from these changes. It is fundamentally unfair to hike costs this much just as people begin to rely on their cover most.

What else does the Budget mean for private healthcare?

Tackling specialist fee affordability

The Budget includes $2.1 million to commission high level advice on improving the affordability of specialist care.

This is welcome recognition of a growing problem that we have been advocating about for years. One in three Australians are currently avoiding seeing a specialist doctor when referred by their GP because they are concerned about cost.

And too many people with health insurance are getting hefty bills from their specialist doctor after a hospital visit because that specialist can charge whatever they like after getting paid by Medicare and health funds for their work.

When patients cannot afford specialist care, they delay care, avoid treatment, or return to already stretched public hospitals. Addressing uncontrolled specialist fee growth must be central to improving access to private healthcare.

Private health system reform

The Government has also allocated $3.2 million to consult on broader private health system reforms.

This is an important opportunity.

Australia’s health system works best when public and private care operate as partners. Sensible reform can strengthen sustainability, improve patient access and ensure private hospitals remain viable, particularly in communities where they play a critical role.

We look forward to working constructively with Government on reforms that make private healthcare more affordable and sustainable for the long term.

Stronger action on Medicare fraud

The Budget commits $146.8 million over four years to strengthen Medicare integrity and fraud detection.

We support this investment.

In a complex health system, reducing fraud, waste and non-compliance protects taxpayers and patients alike. Every dollar recovered or saved is a dollar that can be reinvested into frontline care.

But integrity should go further.

We would also like to see governments move faster to stop funding low-value care – treatments shown to provide little benefit or even cause harm.

Research from the Grattan Institute suggests consumers could save at least $1 billion annually if they were no longer required to fund procedures that evidence shows do not work.

Aligning funding with clinical evidence, including advice from the Australian Commission on Safety and Quality in Health Care, would:

• protect patients from unnecessary harm
• improve quality of care
• help contain premium growth.

The bigger picture

This Budget contains some positive steps toward reform and system integrity.

But it also risks undermining affordability for the very Australians who depend most on private healthcare.

Australia cannot afford policies that push older people out of private cover and into already pressured public hospitals.

The priority now must be to:

• protect affordability
• improve access to specialists
• eliminate waste and low-value care
• build a sustainable public-private health partnership.

Private Healthcare Australia stands ready to work with Government and stakeholders to achieve exactly that.

 

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