05 Jun 2026Opinion pieces
Labor’s health insurance rebate cut isn’t fairness – it’s a cost shift onto families
By Dr Rachel David
The Albanese government believes it has found a way to justify cutting the higher health insurance rebate for older Australians.
Call it “intergenerational fairness”.
The argument sounds neat in a Budget speech. Why, the government asks, should a 72-year-old and a 35-year-old on the same income receive different levels of support for health insurance?
But outside Canberra, the argument quickly falls apart.
Australians do not experience healthcare through Treasury spreadsheets or generational stereotypes. They experience it through ageing parents, hospital waiting lists, family caregiving and the struggle to keep older relatives healthy, independent and living at home for as long as possible.
The government appears to assume younger Australians will support a policy framed as taking support away from older Australians.
But if you talk to anyone in their 40s or 50s – particularly those balancing work, mortgages and children – they will likely tell you something very different.
They are already helping ageing parents navigate the healthcare system. They are driving them to appointments, helping pay bills, checking in after surgery and increasingly stepping into caring roles as parents age.
And many are deeply worried about what happens if their parents can no longer afford health insurance.
Because when an elderly parent drops cover or downgrades their policy, the consequences do not stop with them. The effects ripple through entire families.
Adult children step in financially. Families rearrange work schedules around caring duties. Sons and daughters take leave to care for parents recovering from delayed surgery or worsening health conditions.
This is the reality of the “sandwich generation” – Australians simultaneously supporting children and ageing parents.
And it is growing rapidly.
The government’s fairness argument assumes younger people benefit when support is reduced for older Australians. In reality, many younger Australians will end up paying the price themselves.
If older Australians drop their health cover, they do not stop needing healthcare. They simply join longer public waiting lists.
That means more delays for hip replacements, cataract surgery, cardiac procedures and other treatments that are often essential to maintaining mobility, independence and quality of life.
When older Australians wait longer for care, health conditions worsen. Minor mobility problems become falls. Chronic pain becomes disability. Delayed surgery can mean the difference between living independently and needing aged care or constant family support.
And when parents become less independent, families carry the burden.
This is why the government’s intergenerational fairness argument is not just politically shaky – it is economically and socially backwards.
It assumes healthcare costs can be shifted neatly from one generation to another. But families absorb those costs together.
For many households, this policy simply becomes another financial and emotional pressure landing on the same people.
Health insurance plays a critical role in helping more than 3 million older Australians over 65 stay healthier for longer by giving them faster access to surgery, rehabilitation and specialist care. That is not only good for them, it also reduces pressure on families and the public hospital system.
The government says around 44,000 older Australians will drop their health insurance by 2028-29 because of its decision to reduce the health insurance rebate for people 65 and over. But we do not know how this was calculated or how realistic it is given the broader cost-of-living pressures.
What we do know is that most people with health insurance are not rich. At least 400,000 are pensioners and many others are earning under $50,000 per year.
So far, the government has not chosen to exempt pensioners and low-income earners from the rebate cut, meaning this group will be the worst affected. The rebate cut will contribute to estimated premium increases of up to $1600 for a couple in their 70s on Gold next year.
And if substantially more people downgrade or leave health insurance as result, the consequences will eventually be felt across the entire health system.
Longer waiting lists. More crowded emergency departments. Ambulance queues. More strain on public hospitals already under pressure.
There is also a deeper fairness issue at stake.
Many older Australians have paid health insurance premiums for decades after successive governments encouraged them to do so. They stayed insured through working life on the understanding that the rebate would help make cover affordable in retirement when healthcare needs increase significantly.
Now, many feel the rules are being changed precisely when they need healthcare most.
Australians generally accept that governments face difficult budget decisions. But there is a difference between genuine reform and simply shifting costs onto families under the banner of “fairness”.
If the government wants a serious conversation about intergenerational equity, there are bigger issues to confront: housing affordability, stagnant wages, productivity and the growing financial pressures facing younger Australians trying to build secure lives.
Targeting older Australians’ access to healthcare is not a solution to those problems. It risks creating new pressures for the younger people Labor claims it is trying to protect.
Because when ageing parents cannot access timely care, families step in. And families, not governments, ultimately experience the consequences.