The Australian Medical Association (AMA) has warned proposed changes to private health insurance rebates for older Australians could push more patients towards an already stretched public hospital system and create further financial pressure for private hospitals.
In its submission to the Senate Community Affairs Legislation Committee inquiry into the Private Health Insurance Amendment (Modernising the Private Health Insurance Rebate) Bill 2026, the AMA has called for older Australians on lower incomes to be exempt from the proposed changes.
The association has urged the government to retain existing rebate arrangements for people aged 65 and over who fall within the base tier of the Medicare Levy Surcharge income thresholds.
AMA President Dr Danielle McMullen said the organisation supported greater investment in aged care, but argued the cost should not fall disproportionately on older Australians who rely on private health insurance.
“The AMA welcomes the government’s recognition that aged care requires greater investment, but we do not believe older Australians should be forced to pay for that investment through higher private health insurance costs,” Dr McMullen said.
The government has indicated that savings generated by the proposed changes would help increase funding for aged care. The AMA, however, said the measure could create wider costs for the health system if older Australians reduce or abandon their private cover.
Many older Australians have held private health insurance for years, according to the AMA. Dr McMullen said reducing the rebate for people aged 65 and over, particularly those on lower incomes, could make cover harder to maintain when healthcare needs are more likely to increase.
“The government’s own analysis acknowledges this measure is likely to reduce private health insurance participation and increase demand on public hospitals,” she said.
The AMA said patients who leave or downgrade their private insurance could ultimately turn to public hospitals for treatment, adding to existing demand and potentially affecting waiting times.
It also raised concerns that some people could delay GP consultations, specialist appointments or diagnostic tests to manage higher insurance costs. The association said this could result in people seeking care later, when their health needs may have become more complex.
The proposed changes could have implications for private hospitals as well, particularly smaller facilities and hospitals in regional areas, where healthcare services can be harder to replace.
“Private hospitals play a critical role in Australia’s health system, and many are already struggling with narrow margins,” Dr McMullen said.
The AMA said reduced private hospital activity could put further pressure on facilities that are already facing financial challenges. It also warned that the loss of private hospital services or the departure of specialists from private practice could reduce local access to care.
For regional communities, the association said rebuilding lost hospital capacity or attracting specialists back into private practice could prove difficult.
The AMA has therefore asked the Senate committee to recommend an amendment to the Bill that would preserve existing private health insurance rebate arrangements for older Australians receiving base-tier Medicare Levy Surcharge incomes.
The submission places the debate over the proposed rebate changes within a wider question about how savings for aged care may affect other parts of the health system. While the government has identified aged care as a priority for additional funding, the AMA is calling for the financial impact on older Australians, public hospitals and private healthcare providers to be considered alongside the expected savings.
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