‘Boomer bashing’: Are cuts to private health rebates addressing generational or wealth inequality?

Disability pensioner Denise Peters puts a high value on her private health insurance.

It has helped pay for a hip and two knee replacements, along with other surgeries.

“It’s like a security blanket,” she said.

The federal government announced ahead of the budget that older Australians would see a reduction in their private health rebates, bringing them in line with people under 65.

The government said about 3.2 million older people would now have to pay, on average, between $226 and $255 more a year, with 44,000 older Australians expected to ditch their private health insurance as a result.

Denise Peters is determined to maintain her private health insurance even after the cuts, but it will be a struggle.

She is already going without meals, often eats only soup and is preparing for her food budget to tighten further.

‘Boomer bashing’ concerns

The federal government has sold the rebate cuts for older Australians as a way of addressing generational inequality.

Announcing the move at the National Press Club last month, Health Minister Mark Butler said the higher rebates for older Australians were introduced by the Howard government in 2004 during the China boom.

“In 2026, that’s a policy that’s harder to defend,” Mr Butler said.

The rebate savings will be about $3 billion over the forward estimates, or $11 billion over about a decade and will be used to pay for an extra 5,000 aged care beds and at-home aged care supports.

But many older Australians are unhappy with the rhetoric behind the decision.

“The general narrative of the government around baby boomer bashing hasn’t been helpful. There’s a lot of goodwill that’s been lost with older Australians and the government,” National Seniors Australia chief executive Chris Grice said.

He said many older Australians could not afford the rebate reduction.

National Seniors Australia estimates that a gold-level hospital policy (couple, aged over 70) costing $7,000 will increase by $830 per year as a result of changes.

On top of that, there was an increase of around 4.41 per cent on private health insurance premiums in April this year.

“They’re going to move away from private health insurance, and that’s good for nobody, whether it be an older Australian or a younger Australian; that’s going to impact our systems,” Mr Grice said.

More pressure on state hospitals

State governments are worried about the impact of the rebate reduction.

Tasmania, for example, has the oldest population in the country and higher incidences of chronic disease.

Tasmanians already face long wait times for elective surgeries in public hospitals.

And there are fears that the demand on the health system will only increase under the planned changes to private health insurance.

“It’s an issue that we’ve continued to raise in negotiations, to the national health reform agreement, and they are issues that remain unresolved.”

The head of Health Economics at Monash University, Zanfina Ademi, said from a federal budget perspective, the move made sense.

“But from a broader system perspective, I would be a bit more cautious,” she said.

Professor Ademi said there could also be costs associated with people dropping private health insurance and not taking preventative or timely healthcare measures.

“There is a risk that conditions are managed later, when they are more complex and more expensive to treat, which might further burden the public health system,” she said.

Every dollar needed to invest, government says

The changes to the rebates will need legislation to pass the federal parliament.

Shadow Health Minister Anne Rushton has already spoken out about the move and indicated the Liberals were against the proposal.

If the Liberals decide to block the changes in the Senate, they would need the Greens and at least four crossbenchers to succeed.

Addressing the concerns about the move in parliament this week, Mr Butler described the decision as “difficult” but said the savings were needed.