In sweeping changes announced before the May budget, Australians over 65 will no longer be given special treatment for health insurance rebates, instead paying the same as younger citizens.
The rebate you receive depends on your income, though some older people currently recoup eight per cent more than others on the same earnings. Ending that would save $3 billion over four years, according to the most recent federal budget.
But chief representative for Australian doctors Danielle McMullen said she was unconvinced the changes as they stood would save any money, instead shifting costs to the public sector.
"We are concerned this bill removes a long-standing incentive for older Australians to maintain private health insurance. This is at a time when the private health sector is facing significant pressures and our public hospitals are under considerable strain," the Australian Medical Association president said.
Government modelling suggests about 44,000 people would cancel their insurance under the changes. University of Melbourne figures indicate the figure could be as low as 12,000.
Older Australians who felt a sense of duty to maintain their insurance, even if they were no longer able to afford it, might offset the cost by forgoing other treatments like visits to their GP or engaging specialists, Dr McMullen said.
An 83-year-old retired nurse known only by her first name, Mary, told the inquiry she saw it as her duty to pay for health insurance to free up a public hospital bed.
"We cut our costs to afford private health," she said about deciding with her husband to keep insurance after retiring.
"We don't have any luxuries, but we have a good, healthy life. We have simple pleasures, such as reading."
Mary warned that removing the "small benefit" afforded to seniors who predominantly funded their own healthcare would take away the limited pleasures they had and land more people in hospital.
"We (older people) are an expensive target in terms of health. If we all landed in the public health system, they'd be simply overwhelmed," she said.
Several states and territories have echoed the concerns, warning their hospitals are already overrun.
But federal Health Minister Mark Butler was firm on his policy following a meeting with his state counterparts on Friday, accusing them of believing modelling from the health insurance industry.
"I say to my state minister colleagues, have a look at the government's model," he told reporters.
"Have a look at the independent modelling done by the University of Melbourne, rather than simply accepting arguments that, in the past, have been shown to be self-serving from the insurance industry."
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