Private health insurers, including Bupa and Medibank, are urging the Australian government to raise the Medicare levy surcharge on high earners rather than cut rebates for older policyholders. The push, coordinated by industry body Private Healthcare Australia (PHA), comes ahead of the Albanese government's planned reduction of larger private health insurance rebates currently enjoyed by older Australians, a change due to take effect next year and intended to save the federal budget roughly $3 billion over four years.

Under the government's proposal, the age-based rebate boost, currently up to 32 per cent for those aged 70 and over, would be phased out from April 2027, with all Australians capped at 24 per cent based on income. PHA warns this could push up costs for more than three million older Australians, including 1.32 million pensioners, potentially causing 62,000 to drop cover and 200,000 to downgrade. Instead, insurers propose lifting the Medicare levy surcharge from 1.5 per cent to as much as 3 per cent for top earners above $164,000, which could cost nearly one million high-income Australians almost $5,000 extra a year if they forgo private cover; the number already paying the surcharge has nearly doubled to over 900,000 in the past year.