Federal Budget 2026: Removal of private health insurance rebate for older Australians ‘a kick in the teeth’

The Albanese Government is removing the private health insurance rebate for older Australians as it grapples with rocketing NDIS costs, a move that has been slammed as “a kick in the teeth” for seniors. Health Minister Mark Butler revealed the Federal Budget decision at a Press Club address in Canberra on Wednesday, saying over 65s enjoyed subsidised private health cover at a higher rate than other Australians. The rebate was increased by the Howard Government in the election environment of 2004, when coffers were groaning with mining boom cash, he said. But with the NDIS ballooning at an unsustainable rate, it was a harder policy to defend now. “It means two households on the same income receive different levels of government support, based only on their age,” Mr Butler said. “That’s not fair between generations. “And it’s simply not the best way to spend precious taxpayers’ dollars on behalf of older Australians when we need to do so much heavy lifting in aged care.“So, this Budget will return the rebate for older Australians back to the level paid for everyone else and divert the money back into aged care.” He said it would not be a welcome decision for many, but was the right thing to do. Members Health Fund Alliance, the national peak body representing not-for-profit and member-owned health funds, said the means-tested rebate provided essential cost‑of‑living relief to retirees, particularly those on lower and middle incomes. “Removing the private health insurance rebate for older Australians is likely to cost the Government much more than it saves,” chief executive Matthew Koce said. “For a senior household paying an annual premium of around $6000 before rebates, this would mean an increase of approximately $240 per year for people aged 65–69, and nearly $500 per year for those aged over 70.” The move would force seniors to drop out or downgrade their level of private health cover, shifting care from the private sector to already overstretched public hospitals and ultimately costing the taxpayer more than it saved, the alliance said. Mr Butler also said NDIS fraud “being perpetrated by lowlifes” had trashed community support for the scheme, with more than 60 per cent believing it was “broken”. “The scale and chaotic nature of the NDIS market is distorting other parts of the care economy,” he said.