The government will drastically slash the cost of running the National Disability Insurance Scheme (NDIS) by billions of dollars over the next four years after the program became inundated by "fraudsters".

Health Minister Mark Butler delivered the sweeping changes in a National Press Club Address today ahead of the federal budget and said the $15 billion blow to the NDIS will ensure it is no longer "an ATM for shonks, grifters, fraudsters and crooks".

Describing the changes as "hard but unavoidable" decisions, Butler said the scheme will be redesigned to stop providers from rorting the system and reassess eligibility to reduce the spiralling number of people on the scheme.

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"The NDIS was originally intended to support around 410,000 people with a disability. Today, there are 760,000 people on the scheme," Butler said.

"While new eligibility rules need to be worked through, our initial modelling will see the number of people on the scheme reduce to around 600,000 by the end of the decade, instead of growing to well over 900,000."

Butler warned that if the NDIS continued to balloon at its current rate, it simply would not exist for future generations.

"It costs too much and is growing too fast,' Butler said.

"We can't afford for the NDIS to continue growing at its current rate."

The government flagged eight "recurring design failures" in the NDIS that will be addressed by the overhaul.

Butler said taxpayer dollars spent on the NDIS will be reduced from a forecasted $70 billion to around $55 billion by 2030.

The cost-cutting measures will see NDIS funds per participant wound back from an average $31,000 per person to around $26,000.

The government will also reduce spending on third-parties who manage the majority of NDIS plans and claims by around 30 per cent.

NDIS providers will be more heavily vetted under the changes.

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"Too often in the NDIS, we see that competition play out with third parties cutting costs and cutting corners to get as many plans on the books as possible rather than trying to win clients based on the quality of their service," Butler added.

"Instead of this contest, our government will identify a shortlist of accountable, quality providers which people can choose from."

The government will also make it harder for people to access NDIS funds, with eligibility rules set to change.

A "standardised, evidence-based assessments of a person's functional capacity to determine access" to the NDIS will be introduced, Butler said.

Lists that decide a person's eligibility to access the scheme will be scrapped.

"These so-called access lists were put in place to get the scheme up and running, but they were always supposed to make way for an objective assessment tool," Butler said.

"Instead, the diagnosis gateway has funnelled people onto a scheme that was never designed for them. Now, that's not their fault. They've been told this is the only program available, or that this is the help that their child needs.

"It's our responsibility as governments to make sure that in the future, these Australians are pointed in the right direction."

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Cuts to subsidised health cover Aussies aged over 65

Butler also announced that the government will hand down cuts to subsidised private health cover for older Australians in the May budget.

Residents aged over 65 will receive the same, lower rebate that other Australians are given.

The health minister admitted it would not be a welcome decision, but that it was the "right thing to do".

He said these savings will be diverted into aged care.

"Right now, we subsidise private health cover for Australians over 65 at a higher rate than other Australians," Butler said.

"It means two households on the same income receive different levels of government support based only on their age.

"That's simply not fair between generations. And it's simply not the best way to spend precious taxpayer dollars."

Criticism levelled at NDIS cuts

The opposition claims Butler is attempting to "ram" the NDIS changes through parliament without enough consultation with the Coalition.

Shadow NDIS minister Melissa McIntosh said said not enough detail has been provided over how 160,000 people will be booted from the scheme.

"I have a woman who's told me that she had to prove that she did not have legs to be able to access the NDIS. Does this mean she has to reprove that she no longer has legs so she can get the funding that she desperately needs?" McIntosh told reporters in Canberra.

Greens senator Jordan Steele-John said his reaction to Butler's announcement is one of "shock and deep sadness".

He told the ABC that the disability community is now terrified of what is to come.

"What this means is that thousands of families will live for weeks, months, if not years, in the anguish and uncertainty," Steele-John said.

Chief executive of Spinal Life Australia Mark Townend raised questions about the introduction of stronger eligibility tests.

He said NDIS participants should not be subject to repeated evaluations of their disability.

"For people living with significant, permanent disability, the system must be built on trust," he said.

"Disability does not disappear with age, impairments actually increase, and participants should not be subjected to ongoing, unnecessary reassessments that create stress and uncertainty."

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