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Tuesday, 19 November 2002
Page: 6706


Senator NETTLE (12:11 PM) —I rise to speak to the Medical Indemnity Agreement (Financial Assistance—Binding Commonwealth Obligations) Bill 2002. This bill gives legislative effect to the Commonwealth government's undertaking to provide financial assistance to United Medical Protection Ltd and its wholly owned subsidiary, Australasian Medical Insurance Ltd. UMP-AMIL provided medical indemnity insurance for around 60 per cent of medical practitioners nationally and 90 per cent of medical practitioners in New South Wales and Queensland, before financial difficulties led to their seeking a court appointed provisional liquidator earlier this year. UMP-AMIL had not made adequate provision for incurred but not reported liabilities, estimated to be valued at around $500 million. Under this legislation, the Commonwealth government will pay an unspecified amount of money to UMP and/or AMIL or their insolvency representative and will be obliged to make payments to any other person under a medical indemnity agreement. This bill paves the way for the package of measures that the Prime Minister announced last month, enabling the legislation which was introduced in the other place last week.

The Australian Greens will be supporting this bill. Hardship to individuals and considerable disruption to the provision of medical services are likely to occur in the absence of this short-term assistance from the Commonwealth government. We do, though, have concerns about the package of measures that is designed to provide long-term responses to the medical indemnity insurance issue. The government has estimated that measures will cost $45 million a year, but they could expose the public to unknown financial costs, particularly with the government proposing to contribute 50 per cent of the costs of claims greater than $2 million and subsidising premiums for high-risk specialties. These are open-ended commitments, unlike the guarantee to UMP-AMIL, and they assume the unfunded liabilities of medical defence organisations.

At the same time, the measures fail to adequately address the core issue, the quality of patient care. The measures reflect a narrow approach to a matter that deserves more thorough examination and public debate if we are to reduce injury or adverse events to patients and provide adequate care and treatment to those who are injured. There could also be a further reduction in bulk-billing, as the government proposes to recoup the cost of assuming unfunded liabilities for medical defence organisations by levying medical practitioners. The Australian Medical Association has said that doctors are likely to pass the additional cost on to patients. This concerns the Australian Greens at a time when bulk-billing rates have fallen to a 10-year low. Bulk-billing is an essential component of a national health system. Assistant Treasurer Helen Coonan has said that the additional cost is likely to be less than 20c per consultation, but this assessment seems impossible to make at a stage when the amount of the levy is not yet known.

The government says that it is aware of the need to make the contribution affordable for doctors and allied health professionals, and for this reason it has decided to spread the levy over several years. It says there should therefore be no justification for doctors to increase their charges significantly or to cease bulk-billing due to medical indemnity costs. It is not clear whether there will be any mechanism to ensure that doctors do not increase their fees, and we are concerned about any measure that could lead to further falls in bulk-billing and to financial hardship through higher out-of-pocket costs for patients.

A number of factors have led to the situation that we now face. With rising costs, medical negligence claims and insurance premiums, doctors, nurses and midwives are finding it increasingly difficult to obtain insurance coverage, and insurance companies are finding themselves in financial difficulties. The Australian Council of Professions advised the Senate Economics References Committee inquiry into the impact of public liability and professional indemnity insurance cost increases that professional indemnity premiums had risen by between 20 per cent and more than 200 per cent in recent years.

Rural towns, many of which already have difficulty attracting and retaining health professionals, now face a dwindling number of doctors able to practise, because medical indemnity insurance premiums are rising beyond their capacity to pay. Independent nurses and midwives working in private homes cannot obtain insurance, and midwifery students cannot undertake clinical training, which has longer term implications. Midwives attend the births of around 250,000 babies each year. We cannot afford for them to be unable to practise. We note that the Prime Minister's package did not address the problem confronting either of these professions and we call on the government to rectify this situation. The problems facing these professions are no less pressing than those problems facing the doctors.

One problem identified as contributing to the current crisis is the absence of oversight in the medical indemnity insurance sector. We support the government's plan to bring the sector within the scope of regulatory requirements that will apply to general insurers from July of next year. This measure, along with requirements to submit claims information to government, should improve oversight. The government has also proposed measures to change the mechanics of medical indemnity insurance, such as clearly setting out what is covered to assist prudential supervision, protecting disclosure laws and enabling practitioners to obtain continuous coverage when they switch insurers. These measures will improve the operation of the medical indemnity insurance market.

A large part of the government's focus and efforts has been on litigation. For example, it moves, with the support of state and territory governments, to restrict the rights of individuals to take legal action in cases of negligence and to cap compensation payments. The adversarial approach to dealing with injuries arising from medical treatment is fraught with problems. But in the absence of a better model, the Australian Greens are concerned about moves to constrain the rights of people to seek compensation without any arrangement to provide for the long-term care and treatment of people who suffer medical injuries. Adequate arrangements should be in place before the changes to tort law reform take effect. We call on the Commonwealth government to give this matter urgent attention.

The Senate committee report recommended that the Commonwealth, states and territories examine how best to provide for these long-term needs. There was no mention of this in the Prime Minister's statement of 23 October when he announced the Commonwealth government's package on medical indemnity insurance. The Prime Minister did acknowledge the need to reduce injuries through negligence or adverse events and to improve patients' safety. We note the work that is being done through the Australian Council for Safety and Quality in Health Care and the open disclosure project to improve communication when adverse events occur.

We note that the heads of state and territory treasuries are examining the idea of a no fault scheme for long-term care of people who suffer catastrophic injuries. We note also that the Commonwealth has undertaken to look at the outcome of this work, although Senator Coonan appeared sceptical about such a model in her speech to the Structured Settlements Group late last month. We acknowledge that this issue needs to be examined thoroughly and it should not be rushed, but in the meantime people who suffer serious injury as a result of medical treatment should not be left without adequate provision for their long-term care and treatment, in a rush to constrain the right to seek compensation through the courts.

The main thrust of the Commonwealth's response to the medical indemnity insurance crisis has been to prop up an adversarial system that experts tell us can actually inhibit the kind of changes required to improve the quality of care that patients receive. The issue of quality care has been on the national agenda for almost a decade. The federal Labor government commissioned a study that showed more than one in every six hospital admissions was associated with an adverse event and concluded that about half of those events were potentially preventable. A change in federal government and a failure of political will has meant that the Commonwealth, state and territory governments did not pursue this matter, but the problem has not gone away.

Stephen Duckett, Professor of Health Policy at La Trobe University, argued in a paper that he presented to a conference in September this year that focusing policy attention on restructuring of professional indemnity arrangements detracts from more systemic action to strengthen the other aspects of accountability and improving patient care. He noted that the focus on tort law reform placed Australian policy development at odds with developments in the United States and the United Kingdom, where governments are looking at system changes to reduce the incidence of injuries occurring through medical treatment and in turn were giving serious consideration to no fault systems for compensating medical adverse events. No fault compensation systems operate in New Zealand, Finland, Norway, Denmark and Sweden.

Professor Duckett has pointed to the need to develop a culture of openness and innovation within organisations as the key to improving the quality of management. He argues that such a culture is essential to ensure that staff feel comfortable to report adverse events and not to cover them up. He says that a legal environment where compensation for adverse events can only occur with proof of negligence does not facilitate a process where fault is acknowledged and used as an immediate opportunity to learn. Decisions on compensation rarely address prevention, and the adversarial system is not designed to ensure that similar events do not happen again.

In addition he argues that the system is unfair because two people who suffer identical adverse events may obtain different outcomes on the basis of whether they can prove negligence but they both continue to require identical services, although one may not obtain compensation to help pay for the cost of additional care and treatment. Professor Duckett's arguments highlight the shortcomings of the government's main focus in addressing the medical indemnity insurance crisis.

Another approach has been proposed to Commonwealth, state and territory health ministers but has received little attention so far. Earlier this year the ministers commissioned an options paper on medical litigation reform from the Legal Process Reform Group. The group, chaired by Professor Marcia Neave of the Victorian Law Reform Commission, released its report in September. It proposes a more thorough approach to this issue than we have seen thus far, and certainly one that is more appropriate to the medical field than the review of the law of negligence, which has become known as the Ipp review, on which the proposed tort law reform is founded.

The Neave paper proposes an integrated package that is designed to produce long-term solutions—in particular, to reduce the numbers of adverse medical events and minimise litigation by improving patient safety; to reduce the need to litigate and encourage early finalisation of disputes; to provide fair compensation to people who suffer loss as a result of medical negligence; and to ensure affordable and sustainable insurance premiums. The Australian Greens urge the health ministers to give serious consideration to the proposals in the Neave paper.

The collapse of HIH and the financial difficulties of UMP-AMIL, along with the difficulty that community groups have found in securing public liability insurance, have led to a rush to restrict legal rights of people seeking compensation for negligence. The sense of crisis surrounding this particular issue is not a good environment for sound policy making. The decisions that governments and parliaments are making now in response to these problems will have long-term consequences for many people, and it is important that the best possible outcomes are achieved. In the area of medical indemnity it is vital that we pay proper regard to the special considerations that apply.

The Greens will support this bill but we urge the government, working with states and territories, professional and consumer groups, to look beyond the most obvious responses to the problems that now confront us and work towards changes that will reduce adverse events and ensure adequate arrangements to cover the ongoing cost of care and treatment for people who suffer injuries in the course of medical treatment and have to live with the consequences.