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Wednesday, 23 October 2002
Page: 5716


Senator LIGHTFOOT (2:10 PM) —My question is directed to the Minister for Revenue and Assistant Treasurer, Senator Coonan. Will the minister update the Senate on what steps the government is taking to help ensure that medical practitioners have access to affordable and sustainable medical indemnity insurance? Could the minister elucidate any alternative policies?


Senator COONAN (Minister for Revenue and Assistant Treasurer) —I thank Senator Lightfoot for his question and I acknowledge his longstanding interest in this issue. As senators on this side of the chamber would be well aware, Australia's medical professions have been facing some very real and serious problems in terms of obtaining affordable and available medical indemnity cover. I am pleased to be able to inform the Senate that this morning the Prime Minister announced a package of measures to address rising medical indemnity insurance premiums, which includes long-term measures to ensure a viable and ongoing medical indemnity insurance market.

The government's package is designed to address two fundamental problems in the provision of medical indemnity insurance which are absolutely essential to ensure that vital health services continue to be provided in this country. The package is designed to address the financial viability of the providers of medical indemnity insurance and the affordability of cover for doctors. To address these two issues, the government has put together a six-pronged comprehensive package. The first prong is financial viability. The government has agreed to extend the guarantee to the medical indemnity provider UMP-AMIL for a further 12 months. The extension of the guarantee will enable policies to be renewed and provide certainty to UMP members while the provisional liquidator continues to explore options for the restructuring of the business. The guarantee has not been called on to date to meet any of UMP-AMIL's claims. If it were ever called upon in the future, the cost of the extended guarantee would be funded by members through a levy.

The government will be assuming the unfunded liabilities of medical defence organisations and then later levying doctors to recover the costs of this arrangement over time. The arrangement is to ensure that medical defence organisations are put on a sound financial footing while still ensuring premium affordability for doctors. The alternative to this arrangement would be that doctors would have to fund these liabilities immediately. The levy arrangement enables these liabilities to be funded over at least five years to ensure that premiums for doctors are affordable. It is difficult at this time to say exactly what the levy will be for individual doctors. The liabilities that we are talking about here are highly uncertain. For example, the provisional liquidator has estimated UMP's unfunded liabilities at between $360 million and $500 million.

The levy will be based on a percentage of premiums. The levy will never exceed the levy imposed in the first year. If it turns out that the unfunded liabilities are higher than expected, the term of the levy will be extended. Certain members, for example retired and student members, will not be required to pay the levy. While the cost is not yet certain, the types of estimates that we expect would work out the cost of the levy being less than 20c per consultation for a GP. The government will require medical defence organisations to be regulated by APRA and to provide insurance contracts to their members. This will ensure that members of medical defence organisations have greater security and will be protected by both the consumer and prudential laws that apply to insurance companies.

As to affordability, the government will be providing subsidies to three groups of doctors facing the most serious premium affordability problems. The government will also be providing a large claims scheme— reinsurance cover funding 50 per cent of claims in excess of $2 million. The measure will directly reduce the costs for medical defence organisations in providing cover, particularly to high-risk groups, and it will reduce the costs of reinsurance and assist in stabilising the cost of premiums. These measures are all designed to assist and to protect doctors and to once again restore the services that people need across Australia.