Millions dodge fresh cost of living pain as cut to older Australians’ private health rebate scrapped

Older Australians will dodge an unwelcome cost-of-living blow after the Coalition and Greens teamed up to scrap the federal government’s push to reduce the private health insurance rebate for over-65s.

Health Minister Mark Butler was furious about the move from the opposition and crossbench, who combined in the Senate to discharge the government’s bill from parliament on Wednesday afternoon.

“This is an absolute travesty that flies in the face of any of the members of the Coalition’s professed commitment to sound budget management,” Butler said, labelling the move a “political stunt”.

Under the proposed legislation, the private health rebate Australians aged 65 and over receive would be wound back from next April.

While that would save the federal budget some $3 billion over four years, it would come at the expense of more than 3 million older Australians who would have been left paying up to $410 a year more in higher health insurance costs.

Modelling by financial comparison site Canstar previously found the proposed rebate cuts would mean those aged 65 to 69 would pay $205 more a year, while those aged 70 and over would pay $410 more a year on a gold policy.

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That blow would have come on top of the regular government-approved increase to private health insurance premiums, which this year rose 4.41 per cent – the largest hike since 2017.

Polling conducted by RedBridge in July found almost 40 per cent of older Australians were preparing to drop their private health cover because of the lower rebate.

Peak body Private Healthcare Australia welcomed the news that the legislation had been cast out of parliament.

“This is a powerful demonstration of how much older Australians value their health insurance and the security, choice and access to care it provides,” chief executive Dr Rachel David said.

However, Butler said the legislation would be re-introduced on Thursday morning.

The government has said the proposed rebate cut is a difficult but necessary move to put a lid on public spending and free up funding for other parts of the aged care sector.

“We get a lot of lectures from the opposition about the need for strong fiscal management,” Butler said.

“Yet every time we bring a difficult saving measure to fund new important services, politics takes over and the Coalition decides to oppose it because they think that it can ground a strong political campaign for them.”

The Coalition voted with the Greens and independent Senator Jacqui Lambie to strike the bill from the agenda, effectively throwing it out of parliament without debate in the upper house.

“You’d be hard pressed to find a public hospital in this country that isn’t already at absolute capacity. This bill would have made it so much worse,” Lambie said.

“Older Australians are already paying through the nose for private health insurance and many would have been forced to choose between putting food on the table and looking after their health.

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“It’s unbelievable that anyone should have to make that choice in modern day Australia ... you do not balance the budget on pensioners.”

Butler was particularly scathing of Greens boss David Shoebridge, accusing the minor party’s new leadership of refusing to negotiate in good faith.

“If amendments are moved, of course, the government will have to consider those amendments in good faith as we have been in discussions and negotiations before,” the health minister said.

"The bill was intended to be debated in the parliament, but this idea of just discharging a bill without a reasoned, proper debate is pretty extraordinary."