Breaking: Government fails to secure support for beleaguered private health bill

Controversial private health insurance changes affecting older Australians are now on life support, after the legislation was effectively thrown out of parliament by the Coalition and crossbench.

The proposal would wind back the rebate Australians aged 65 and over receive on their private health cover from April next year, banking $3 billion over four years to be spent elsewhere in the aged care sector.

However, the legislation cannot continue through the Senate in its current form, after the Greens teamed up with the Coalition and Independent senator Jacqui Lambie on a motion to strike the bill from the parliamentary agenda.

Health Minister Mark Butler held a snap press conference on Wednesday afternoon, vowing to push ahead with the policy, flagging the government would reintroduce the exact same legislation on Thursday.

"This is an absolute travesty … that flies in the face of what I thought was a clear understanding across the parliament of the need to fund better aged care services,"

he said.

"What appears to be a rush of blood to the head by the new leadership of the Greens party, that's all become a bit of a pile on in the Senate and a discharge of a bill instead of a reasoned debate."

Shadow Health Minister Anne Ruston said Mr Butler should "take the hint".

"Don't try to sneak this cut back onto the agenda. Drop it for good," she said.

"Today the Senate stood with older Australians. Labor was left standing alone with its cuts."

With the Coalition vowing to block the legislation in the Senate the federal government had been counting on the Greens to try to get the bill through.

Last month, the ABC revealed about $1.6 billion of the forecast savings would be clawed back from pensioners which drew broad condemnation from the Opposition and crossbenchers like Monique Ryan.

Greens leader David Shoebridge said while the party supported reducing private health rebates, they did not want to "punch down" on pensioners, and would support the legislation if pensioners were exempt.

"It is plain offensive to see Labor looking for over a billion dollars in savings from cutting rebates to pensioners when they refuse to even consider taxing record gas export profits," he said.

"Labor has been told time and time again what we need for our support, and they refused to seriously engage."

Senator Lambie accused the government of trying to "balance the budgets on pensioners".

"Older Australians are already paying through the nose for private health insurance and many would have been forced to choose between putting food on the table and looking after their health. It's unbelievable that anyone should have to make that choice in modern day Australia."

Policy has been attacked on multiple fronts

The government was counting on the $3 billion raised from the changes to fund crucial aged care commitments.

But the beleaguered policy has been attacked on multiple fronts, with the states and territories, aged care sector, private health industry, the Coalition and crossbench all arguing it could pile pressure on the public system.

However many health economists have backed the policy, saying the impact on the system would be trivial and the money would be better spent elsewhere.

In defending the legislation, Health Minister Mark Butler had said only 44,000 people would dump their private health cover as a result.

However, this week health department analysis was released under Freedom of Information laws, revealing that number was forecast to rise to a cumulative total of 78,000 by the end of the decade.

Mr Butler on Tuesday defended using the smaller number, saying the health department had indicated it was "the most reliable figure" and that the number of people with private health would continue to grow.