Catholic Health Australia Submission: Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026

Executive summary

The Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026 (the Bill) removes the age-based uplift to the Private Health Insurance Rebate for Australians aged 65 and over from 1 April 2027. Catholic Health Australia (CHA) acknowledges the Government’s objectives of intergenerational equity in the rebate and increased investment in aged care. Our concern is that the Bill’s costs do not fall evenly across the 3.36 million Australians it is estimated to affect. On DHDA’s own modelling and on CHA’s analysis, they concentrate among the most disadvantaged members of that group: Age Pensioners and low-income retirees, the over-75s, frail residents of aged care, and regional and rural communities with no alternative provider. These are the cohorts CHA members were established to serve, and this submission is made on their behalf.

The Bill’s costs fall on the Australians least able to bear them. DHDA’s own modelling shows 95 per cent of projected cover losses occur in the lowest income tier. CHA’s analysis (which adds the downgrade response DHDA did not model) estimates approximately 710,000 affected over-65s, roughly one in five, will change their relationship with cover, of whom approximately 155,000 will move to cover that materially reduces their access to hospital care. Approximately 900,000 of the affected cohort earn under $55,000 a year and approximately 350,000 under $30,000. The over-75s face double the rebate reduction of the 65–69 cohort while claiming the highest benefits of any age group. A substantial number of aged care residents and home care recipients hold private hospital cover and rely on it for the elective procedures that most affect function in later life; where that access is lost, functional decline accelerates and entry to residential care is brought forward. And in regional Australia, where around 70 per cent of insured over-65s live, losing effective cover does not mean switching provider but joining a public waiting list that in Lismore already runs to twelve months for Category 3 patients. For this cohort the decision is effectively irreversible: Lifetime Health Cover loadings mean an exit at 70 cannot be undone at 73.

The evidence base does not support the Bill as drafted. The Parliament cannot presently test whether these concerns are well founded, because the analysis that would settle them has not been produced. Downgrade behaviour – approximately 94 per cent of the total behavioural response – was not modelled. Public hospital flow-on cost “cannot be reliably quantified”. No distributional analysis of the affected cohort has been published, despite DHDA holding the linked Services Australia and Australian Taxation Office data required to produce it, and despite the Bill being justified on equity grounds. No regional or facility-level analysis was undertaken. State governments were not consulted, and the health ministers of New South Wales, Queensland and Tasmania have since formally raised concerns. The Office of Impact Analysis rated the Impact Analysis “Adequate” rather than “Good Practice”, and DHDA’s success metric is set approximately seven times above its own modelled response, meaning it will be met even if the measure causes substantially greater harm than projected.

The claimed saving is substantially offset by costs shifted elsewhere. CHA estimates approximately $675 million per year in flow-on costs to public hospitals at steady state (scenario range $325 million to $1.0 billion). Over the forward estimates, states bear approximately $1.1 billion of that, which is conservative as it does not account for states already at the National Health Reform Agreement (NHRA) funding cap. Further costs return to the aged care system as delayed elective surgery accelerates entry to residential care. Roughly two-thirds of the headline saving is consumed by costs the measure itself creates. The Bill also contracts private hospital revenue by an estimated $275–415 million per year across the CHA member network, landing on a sector that recorded a $756 million operating loss in 2024-25, and concentrated in the standalone regional facilities least able to withstand it. St Vincent’s Private Hospital Lismore projects that the Bill could result in the closure of the hospital – the only private hospital serving approximately 250,000 people in the Northern Rivers. Actuarial modelling commissioned by DHDA itself reached a comparable conclusion before the Bill was drafted: $482 million in rebate savings against $547 million in additional public hospital costs.

The measure is presented as a saving that funds better care for older Australians. On the evidence available, it moves cost rather than removing it, and it does so by reducing the healthcare access of low-income and vulnerable older people, including, in some regional communities, by removing the only private hospital they have. CHA encourages the Government to complete the evidence base before the Bill proceeds: modelling downgrade behaviour, quantifying the public hospital flow-on and its distribution between the Commonwealth and the states, publishing distributional analysis of the affected cohort, assessing the regional impact, and consulting the states that will fund the displaced demand. Where that analysis confirms the response concentrates among low-income older Australians, the Government should give consideration to protecting those least able to absorb the change. CHA also recommends this Bill be considered within the Government’s own private health sector reform process rather than ahead of it, and that the current success metric be replaced with an independent post-implementation review capable of detecting harm within a meaningful timeframe.