Mark Butler’s bombshell: Sweeping changes to aged care and disability support unveiled

The Federal Government has announced significant changes to Australia’s aged care system and the National Disability Insurance Scheme, marking a broad shift in how support services are funded, accessed and delivered.

The package includes the removal of higher private health insurance rebates for older Australians, adjustments to aged care charging arrangements, and tighter controls on NDIS spending growth and eligibility.

Health Minister Mark Butler outlined the reforms at the National Press Club, describing them as necessary to ensure the long-term sustainability of Australia’s care systems and to improve consistency across generations. The changes are expected to affect hundreds of thousands of Australians across both programs.

Rebalancing health subsidies for older Australians

A central element of the reforms is the abolition of the higher private health insurance rebate for Australians over 65, a measure that has been in place for more than two decades.

The Government will redirect the associated savings into aged care funding, arguing that current arrangements provide uneven support across age groups with similar income levels.

Officials say the change is designed to improve fairness within the system and better align government contributions with current priorities in aged care.

However, older Australians typically have higher healthcare needs, including more frequent hospital admissions, specialist care and ongoing chronic disease management. The rebate has historically played a role in offsetting these costs and easing pressure on both households and the public health system.

Aged care charging settings revised after implementation issues

The reforms follow recent adjustments to the Support at Home program, introduced in late 2025, which initially required co-payments for personal care services such as showering and dressing.

These settings led to significant community concern, with some participants facing hourly charges for essential daily support.

The Government has now confirmed that these services will be reclassified as clinical care from October 2026 and will no longer attract direct fees.

While the change restores full coverage for these services, it will not apply retrospectively, meaning individuals who have already paid under the current arrangements will not be reimbursed.

Aged Care Minister Sam Rae said the Government had taken account of feedback from participants and service providers, noting that policy design involved competing views and considerations.

NDIS funding growth to slow under new settings

The NDIS will also undergo substantial changes aimed at moderating growth and tightening eligibility over the coming years.

Key reforms include a reduction in projected participant numbers from around 760,000 to 600,000 by the end of the decade, a decrease in average funding for social and community participation supports, and a 30 per cent reduction in spending on plan management and coordination services.

The Government also plans to replace diagnosis-based eligibility with functional capacity assessments and introduce new legislative controls on scheme expenditure.

Minister Butler acknowledged the reforms would have a direct impact on individual plans, but said they were required to maintain the scheme’s long-term viability.

Shift towards functional assessments raises transition questions

Under the new model, eligibility for the NDIS will be determined by functional need rather than diagnosis alone.

All current participants will be subject to reassessment from 2028, with some expected to transition out of the scheme if they are assessed as having lower support needs.

The Government has indicated that alternative supports, known as foundational services, will be developed in partnership with state governments. However, these systems are still in progress, raising concerns about continuity of support during the transition period.

Shared responsibility with states under pressure

The reforms rely on increased coordination between the Commonwealth and state governments following a National Cabinet agreement that expanded shared responsibility for disability supports.

While some jurisdictions are progressing implementation, others have moved more slowly, creating uncertainty around timelines for foundational supports.

The Government has described ongoing negotiations with states as standard practice in federal reform processes, although effective alignment will be critical to avoid gaps in service delivery.

Integrity measures and cost pressures

The Government has also pointed to fraud and misuse within the NDIS as part of the rationale for reform, citing cases involving poor service delivery and inappropriate billing practices.

At the same time, officials acknowledge that rising participant numbers, workforce constraints and increasing demand for services are significant drivers of overall cost growth.

The reforms aim to strengthen oversight while maintaining core supports for participants.

Broader implications of the reforms

The Government has framed the changes as a necessary recalibration of Australia’s care systems to ensure financial sustainability and long-term equity across generations.

For older Australians, this includes a shift in how private health subsidies are structured alongside changes in aged care delivery. For NDIS participants, it signals a move towards tighter eligibility, slower growth in funding and revised service models.

The practical impact of the reforms will depend heavily on implementation, particularly the rollout of alternative supports and the coordination between federal and state governments.