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Tuesday, 25 November 2003
Page: 22748


Mr BAIRD (4:58 PM) —The Medical Indemnity Amendment Bill 2003 and the Medical Indemnity (IBNR Indemnity) Contribution Amendment Bill 2003 form an important response to the crisis that developed following the provisional liquidation of United Medical Protection in 2002. The legislation specifically addresses the concerns of the medical profession and the members' liability. I, like a number of my colleagues in this House, was approached by doctors in my electorate who were concerned about the significant increase in insurance that they were faced with. I am very glad to see that we have this legislation before us, proposing a number of moves which can reduce the level of liability of doctors and, of course, avert the crisis that was threatening the operation, significantly, of specialists in this state, particularly those involved in orthopaedic surgery and other areas.

It was obviously a concern that the liabilities were such that continuing in their profession was in doubt. That particularly related to some of the older members of the profession—those over 65—who may have been considering retirement but who continued to work for two or three days a week. They were finding that the costs of insurance were significant and were debating whether they would continue on. Some did retire; now, when they see the various initiatives in place, they may wish to reconsider.

I certainly commend the minister on the measures that he has developed through this piece of legislation. In fact, if we look at the operation of UMP we see that it was not so long ago—on 21 December 1999—that UMP claimed to be in a strong financial position. The directors claimed that because of proactive, responsible financial planning over the past few years a levy call has been unnecessary. This claim was made on the basis that some members had suggested that UMP had significant unfunded and unaudited liabilities. The directors went on to say that for the year ending 30 June 1999, United's balance sheet `shows gross assets of over $489 million'. They said:

After allowing for liabilities that include adequate reserves for outstanding claims, we have a surplus of $149 million which is available for members' IBNRs.

So they were constantly reassuring the membership that UMP was in a sound financial position. However, the real case was something different.

One of the issues that confront the medical profession is the question of liability and the way in which damages have been awarded. Negligence cases have had very large damages attached to them. The more they escalated and the more the legal sector was involved in making claims, the greater the liability of those covering those damages, such as UMP and others, and the greater the vulnerability to the very situation we are talking about. The origin of these changes is in tort law reform. I am very pleased to see that action is being taken by the states, as it is the province of the states. Some states have moved further than others. In New South Wales there has been a significant effort to move on tort law reform. There have been some changes in workers compensation and now there are changes in medical claims. Obviously other states need to move in this area as well. In the meantime, a number of initiatives have been put forward to take the heat out of the situation in the interim.

The bill will put a moratorium, which was announced at the beginning of October, on the IBNR contributions. Most importantly, the moratorium places a capped limit of $1,000 a year on contribution payments for the next 18 months while a more equal and satisfactory outcome is devised. The moratorium will ensure that in the event of death a doctor's estate will be exempt from liability in that year and any existing IBNR contributions will be refunded. Claims that are excessive, as we have seen, are being put on hold. No-one can complain about the interim arrangements.

The government has agreed to cover the liabilities for the claims that have not yet been lodged, that have been incurred but not reported—that is, the IBNR liabilities. When UMP became insolvent, the government assumed responsibility for the IBNR liability, which was estimated to be $460 million. However, the government considered it was only fair that doctors should be required to contribute to the cost of this liability over a period of five to 10 years. I am sure all members of this House would agree that there has to be a contribution by the doctors. Doctors' negligence, after all, is involved and their contribution is significant.

It was not until the doctors received their notification this year that it was seen that changes needed to be made. We recognise that the concerns of doctors are very real. Similarly, we recognise that a satisfactory system needs to be implemented in order for doctors to be able to continue to practise with confidence rather than leave the profession, which may have occurred. This bill is the latest in the measures proposed by the government to rectify the situation.

In my electorate, the number of doctors who are specialists and who are practising past the age of 65 is significant. I have had a number of visits from them in my own electorate. Far from forcing people to retire, we are committed to keeping these people in the work force. Doctors who have to retire as a result of disability or permanent injury will be exempt from this levy. We have extended the high cost claims scheme to cover 50 per cent of claims between $500,000 and $20 million. Of course, we must keep in mind that the highest ever award for damages in Australia was less than $15 million. Compensation packages are in fact experiencing downward pressure as each state undertakes tort law reform.

The changes that have occurred show that the government are putting in a remedy to provide surety to the entire medical sector. We want the industry to have a proper understanding of the real issues and we want to improve the current system of compensation in conjunction with the various state governments. Most of what happened to UMP was because of excessive legal awards. The response we have had from various state and territory governments has been pleasing. Through prudential supervision, medical defence organisations—MDOs—will now be required to offer contracts to doctors. This will provide peace of mind to the medical fraternity to the extent that they know they have a certain cover to a certain limit specified in their contract. Previously, the cover was essentially limited by the capital reserve held by the MDO.

A special review committee chaired by the Minister for Health and Ageing and the Assistant Treasurer and consisting of professionals from medicine, law and finance is currently addressing the issue. It is expected that the committee will report to the Prime Minister on 10 December. The panel's prime responsibilities are to ensure that arrangements made to medical indemnity are stable, transparent financially and understandable to all parties concerned; that the cover provided to doctors is comprehensive and affordable; that the medical profession is allowed to continue to practise to its full potential; and that the interests of all concerned parties are safeguarded.

Doctors will be provided with cover on any judgment or settlement that exceeds the doctor's level of insurance cover. Of course, that is most significant. It is important to regain the confidence of doctors in this area and to ensure that they do not expect significantly increased liability insurance claims. The government must produce a medical indemnity system in which doctors have confidence and in which they will continue to practise. These measures must be adopted and implemented at the earliest possible opportunity.

Of paramount concern to the government is the commitment to ensure that all Australians have access to high quality, affordable health services. As the House is aware, last week the government launched MedicarePlus, a further $2.4 billion commitment to strengthen Medicare. These changes will have significant impact on out-of-pocket medical expenses, the number of doctors and nurses in the profession, the number of doctors for aged care, and bulk-billing. The community will be protected from high out-of-pocket medical expenses incurred outside hospital. That will have a large impact, and 12 million people will benefit from the provisions outlined. Concession card holders and families receiving family tax benefit category 1 will be covered for 80 per cent of the out-of-pocket costs for medical services provided outside hospital above $500 per individual or family per year. Four out of every five Australian families will be assisted by this arrangement. For the remaining eight million Australians, the government will provide medical costs of 80 per cent of their out-of-pocket costs over $1,000 per individual or family per year. By 2042, over half the population will be aged over 45 and over a third aged over 55. In my electorate of Cook, 18.5 per cent of the community are aged over 65. We currently have a life expectancy which is the third longest amongst developed nations behind Japan and Switzerland. These demographics alone identify the need for real legislative reform.

The new MedicarePlus will cover comprehensive medical checks for aged home care residents. Funds will be provided to GPs for services to residents of aged care homes who do not have or cannot access their regular doctor, including in an emergency or for after-hours care. We are committed to providing another 1,500 doctors in the community. This will free up GP time so that doctors can focus on the medical issues which are most appropriate to them. More doctors will be trained and more doctors will be encouraged to enter the profession, including overseas trained doctors and supervised junior doctors to work in areas of shortage. Doctors wishing to return to the profession will receive help from the government for retraining. More than 1,600 practice nurses will be supported by the government through grants to practices and new rebates for nurses to carry out medical services such as immunisations and wound management.

In terms of overall spending on health, we are concerned about the ageing demographic and we are addressing the issue. Over the last 10 years, we have gone from spending 8.5 per cent of GDP on the health portfolio to 9.3 per cent of GDP. In the last quarter, the Australian government spent $2.166 billion on Medicare payments. That is an increase of 2.4 per cent on the same period last year, and it is hardly the act of a government committed to dismantling the system, as some opposite have claimed.

The government want to ensure that Medicare and bulk-billing are retained and that they are structured appropriately. We want to ensure that an appropriate safety net is provided for those on concession cards and lower income levels and for families and the general community. MedicarePlus retains the government's commitment to bulk-billing. Bulk-billing remains an important platform for this government's health policy agenda. The government are committed to paying GPs an additional $5 for every bulk-billed medical service provided to Commonwealth concession card holders and to children aged under 16.

Medical professionals play an important part in the fabric of our nation. However, they must be given the latitude to move free of a socialised health system, and I am sure none of them want to be involved in that. It should not be compulsory for all doctors to bulk-bill all their patients. We believe that there should be freedom of choice. Bulk-billing remains at high levels in the community. In fact, close to 70 per cent of GP services are provided to the patient at no cost. In my electorate this figure is 74 per cent. Doctors will be free to bulk-bill and set levels at their own discretion. But we must remember that since Medicare was introduced no government has compelled a doctor to bulk-bill.

Doctors are a vital and important part of our community. It is in the interests of all people that our doctors are covered and that they are free to practise as long as they are able to choose. The amendments to the Medical Indemnity (IBNR Indemnity) Contribution Amendment Bill 2003 are a welcome measure that allows a freedom of choice for both doctors and patients. It is a move towards better health for the people of this nation. We were confronted with the challenge of the increasing levels of IBNR cover for doctors. Costs for doctors were escalating due to the very significant awards being made by the courts. The states are moving towards tort law reform so there will be some capping of these major awards that have been given for damages and negligence. The government is moving to cover costs so that there is no charge greater than $1,000 over the following year.

The committee must report to the Prime Minister in two weeks and come up with recommendations and solutions for the longer term. Obviously, we need to find a workable solution that is acceptable to the doctors, that provides the right incentives for them, and that is not so punitive that they feel they need to leave the profession or have to struggle to meet their costs. None of us would want that situation to occur. They are a talented and professional part of our community that deserves to be recognised and rewarded appropriately. We recognise that they have suffered excessive costs for insurance cover. This issue is being addressed by this bill. It is all part of this government's package to address the nation's health care. The changes that are being made have been welcomed widely in the community. This legislation will add to the overall reforms being carried out by the minister. I commend the bill to the House.