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Monday, 9 December 2002
Page: 7461


Senator ALSTON (Minister for Communications, Information Technology and the Arts) (4:47 PM) —I table a revised explanatory memorandum relating to the bills and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows

This package of bills will enact key elements of the government's new framework for medical indemnity insurance announced by the Prime Minister on 23 October 2002.

These bills contain measures designed to make the medical indemnity market more sustainable and provide affordable medical indemnity coverage for doctors. They will ensure key private medical services, including in rural and regional areas, are maintained by giving doctors the certainty they require.

For the last eight months this government has been working actively to find a solution to the problems in the medical indemnity market.

These problems are not of the Commonwealth's making. Nonetheless, we have put every effort into finding appropriate and affordable solutions to ensure doctors can keep practising with confidence and that they will have access to affordable medical indemnity insurance into the future.

Together, the bills I am introducing today provide for:

· a scheme to fund the incurred but not reported liabilities of medical defence organisations where they do not have adequate reserves to cover these liabilities, as well as a levy on members to fund this scheme;

· a High Cost Claims Scheme to enable the Commonwealth to fund 50 per cent of the cost of payouts by medical indemnity insurers greater than $2 million, up to the limit of a practitioner's indemnity cover; and

· direct premium subsidies for doctors with especially high medical indemnity premiums.

The government's policy on medical indemnity was put together following widespread consultation with doctors, other health professionals, insurers, state and territory governments and other stake-holders in the health sector.

We have worked cooperatively and constructively with all parties and as a result those groups most affected by rising medical indemnity insurance premiums as well as those providing such insurance have welcomed the government's policy. The Australian Medical Association, the Royal Australian College of General Practitioners, the Rural Doctors' Association of Australia, the Neurosurgical Society of Australasia and the provisional liquidator of UMP/AMIL have all welcomed the broad ranging initiatives contained in our policy as reflected in the bills before you today.

While these bills will go a long way towards putting a cap on rising medical indemnity insurance premiums for doctors, they need to be backed by significant tort and legal system reforms at the State and Territory level.

Effective tort and legal system reforms will provide greater certainty to insurers in determining the number and size of likely claims while at the same time having due regard to ensuring fair and reasonable compensation for victims.

These law reforms will have flow-on effects in terms of the availability and affordability of medical indemnity cover in the longer term.

This government has taken a leadership role on the issue through the appointment of the high-level panel headed by Justice Ipp to review the laws of negligence. We will continue to urge State and Territory governments to implement the recommendations of the Ipp review to ensure that these law reforms are carried out in a nationally consistent manner where possible.

MEDICAL INDEMNITY BILL 2002

This bill provides for the IBNR indemnity scheme.

The reality is that some MDOs just don't have adequate funds to meet these claims for which they are liable but that haven't yet been reported. These MDOs have not been charging high enough premiums.

Without the IBNR scheme proposed by the government, those MDOs with unfunded IBNRs would have had to fund them either by raising premiums further or by making compulsory `calls' on their members.

This scheme will give affected MDOs such as UMP/AMIL the chance for a fresh start unencumbered by past claims incurred liabilities.

Under the scheme, the government will assume responsibility for the unfunded IBNRs of any MDO that has them. The scheme will allow members of MDOs with unfunded IBNRs to fund these liabilities over time, through an affordable tax deductible levy.

The High Cost Claims Scheme is also provided for in this bill. Under this scheme, the government will assist with the cost of large claims, ensuring medical defence organisations pay out less on big claims and enabling them to reduce the amount of reinsurance they have to purchase. In this way, the scheme should have a direct impact on premiums.

Insurance markets currently have little appetite for taking on large and uncertain risks. This is especially the case in the medical indemnity insurance market where it is difficult to assess risk and to price premiums appropriately.

By paying half of the amount of any insurance payout greater than $2 million, up to the limit of an individual practitioner's insurance coverage, the government will reduce this uncertainty and help ensure that adequate cover is available where incidents result in catastrophic injuries for patients.

Finally, the bill provides for the introduction of premium subsidies for doctors.

Whilst premiums have been rising generally for doctors over recent years, for some doctor groups these increases have been particularly large. This government will introduce arrangements to help these doctors afford their premiums while the broader reforms take effect.

We propose to provide subsidies to practitioners who face the most serious premium affordability problems relative to their peers—obstetricians, neurosurgeons and procedural GPs.

These subsidies will bring the premiums these doctors pay closer to those paid by other doctors in a comparable professional group. The subsidies will assist these doctors to continue to provide valuable services to the community.

This is of particular importance in the case of GPs providing anaesthetic, obstetric and surgical services in rural and remote areas.

Earlier Government initiatives

These bills follow a range of other initiatives taken by the government this year aimed at addressing issues in the medical indemnity sector.

Earlier initiatives included:

· an initial guarantee, and an extension of that guarantee, to the provisional liquidator of UMP/AMIL;

· a medical indemnity forum and ministerial meeting on public liability hosted by the Commonwealth;

· the commissioning of the Ipp review of the law of negligence; and

· legislation to allow structured settlements to be treated in the same way as lump sum payments for taxation purposes.

Market Reforms

Regulatory reform for medical indemnity insurance providers and the introduction of consumer safeguards also form a key part of the government's policy on medical indemnity. These reforms will be enacted through legislation that will be introduced separately.

Essentially these reforms are about ensuring that MDOs remain solvent so that claims can be met, and doctors have access to adequate cover that meets their needs so that they can continue to provide vital medical services to the Australian community.

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MEDICAL INDEMNITY (CONSEQUENTIAL AMENDMENTS) BILL 2002

The Medical Indemnity (Consequential Amendments) Bill 2002 makes consequential amendments to other health legislation to assist in the administration and the operation of the legislation. I commend this bill to the Senate.

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MEDICAL INDEMNITY (ENHANCED UMP INDEMNITY) CONTRIBUTION BILL 2002

The Medical Indemnity (Enhanced UMP Indemnity) Contribution Bill 2002 provides for the government to recover the cost of the guarantee to the provisional liquidator of UMP-AMIL. The Commonwealth is yet to make any payment under this guarantee and may indeed make no payments at all if UMP-AMIL is able to trade its way out of its present difficulties.

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MEDICAL INDEMNITY (IBNR INDEMNITY) CONTRIBUTION BILL 2002

In the Medical Indemnity Bill 2002, the government has put in place a scheme to fund the incurred but not reported liabilities of medical defence organisations where they do not have adequate reserves to cover these liabilities.

The Medical Indemnity (IBNR Indemnity) Contribution Bill 2002 requires a contribution from members of medical defence organisations with unfunded IBNRs to cover the cost of Commonwealth assistance in meeting those liabilities.

The government is aware of the need to make the contribution affordable for doctors and other allied health professionals. This is why it will be spread over a number of years. There should therefore be no justification for doctors increasing their charges significantly or ceasing to bulk-bill due to medical indemnity costs.

Debate (on motion by Senator Buckland) adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.