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Tuesday, 10 December 2002
Page: 7584


Senator BUCKLAND (5:13 PM) —I seek leave to incorporate my speech on the Medical Indemnity Bill 2002 and related bills in Hansard.

Leave granted.

The speech read as follows

I rise to speak today on the four medical indemnity bills before us.

The rationale behind these bills is to put into place specific instruments to tackle the problems regarding the medical indemnity insurance crisis.

Over the last year or so we have seen the insurance market experience a series of blows, witnessing the collapse of HIH Insurance and the terrorist attacks on the World Trade Centre Towers on 11 September 2002.

These collapses and catastrophes in the insurance market have largely contributed the current difficulties we are experiencing in the medical indemnity market.

Through these events, we have come to realise that the insurance arena is a fallible one and at some point there has been a serious lack of foresight on the part of the industry.

In summary, the Medical Indemnity insurance market is made up of Medical Defence Organisations (MDO's), state government funds and commercial insurers which all afford medical indemnity cover to various health professionals, such as doctors.

The ethos of MDO's is that they are a not-for-profit mutual organisations. They were specifically set up for their members rather than for the financial benefit of shareholders.

There are several major medical defence organisations in Australia, which rely heavily on reinsurance to protect their financial position.

In recent times, further capital has had to be arranged for four of these MDO's since 1999 by `making a call' to members for an additional amount of money. One would consider this as a warning sign.

Consequently with all the complexities surrounding the medical indemnity crisis, this package of legislative reforms has been designed to ease the pressure being placed upon providers of medical indemnity. It's primary goal is that incurred, but not reported claims and high cost claims with funding support being offered to medical indemnity providers who have claims that fall within these two categories.

The package also puts into place the agreements for the Government to provide subsidies to certain sectors of the medical profession seeking medical indemnity cover such as obstetricians, neurosurgeons and GP proceduralists.

However, this legislation package fails to contain measures to scrutinise the effectiveness of the Federal Government's facilitation in reducing costs of medical indemnity. It does not contain any prudential regulatory measures to address the operations of medical indemnity providers.

Currently the bills confirm the deal previously announced by the Government and gives this arrangement legislative effect. It gives effect to those elements of the government's policy announced on 23 October 2002.

The three main measures that this legislation package firstly, addresses is the IBNR scheme which assist the MDO's with unfunded IBNRs as of 30 June 2002 to pay for those claims when they arise.

The second measure deals with the effect of the High Cost Claims Scheme, which addresses the issue of high cost claims and relates to medical incidents in this package of bills.

It endeavours to lower premiums by reducing the potential cost of large claims to insurers.

Finally, the third measure in this package of bills gives effect to subsidies. This subsidy will be provided to obstetricians, neurosurgeons and procedural GP's who undertake Medicare billable procedures.

The Medical Indemnity crisis has affected many doctors and has had a greater and detrimental effect on the availability and affordability of medical services for all Australians.

It is therefore a national issue and consequently requires a national response to be provided and led by the Government.

The harsh reality is that unless Medical Indemnity insurance is available to doctors at affordable levels, doctors will no longer be able to offer bulk-billing to their patients and will no doubt also charge a co-payment.

This scenario in the GP context will result in people who cannot afford to pay for a visit to the doctor not being able to access primary and preventative care that they need.

This in itself will lead to a greater drain on future health care budgets.

We will also see a mass departure of doctors from the profession, either seeking a safer environment in respect to insurance, or taking on an early retirement.

Further, new doctors will choose not to enter high-risk specialties.

Those that will suffer the most from this are low-income earners and those in rural and regional areas.

The Howard Government has not adequately recognised the medical indemnity insurance problem and has not acted quickly enough to address its adverse effects, including higher medical costs and reduced availability of services for Australians and their families.

They have also failed to address the effects of higher medical indemnity insurance premiums on midwives, private hospitals, family planning clinics and aboriginal medical services. The United Nation's Human Development Index released in July of this year stated that Australia's indigenous people whose poor living and health conditions meant that Australia ranked amongst the worst in the developed world for poverty. It seems we can strut the world stage and advocate justice and democracy, but we can't provide for our own less well off who have health needs.

The government needs to provide leadership in it's role to co-ordinate reforms necessary to State and Territory laws with the aim of uniformity in tort law reforms and they also need to put in place a national scheme to ensure the long term care and rehabilitation needs of catastrophically injured Australians.

The ACCC must do all it can to ensure that whatever changes occur in medical indemnity insurance, that no unfair or unreasonable costs flow to patients by way of the cost of their health care.

The ACCC must also play a more active role in bringing together medical defence organisations and representing them in negotiations with reinsurers and support APRA with appropriate resources to fulfil its greater regulatory role in medical indemnity insurance.

It must be said that the government unfortunately been unenthusiastic about taking part in addressing medical indemnity insurance and only took preliminary steps following the last federal election. In December 2001 the Prime Minister was late to announce a National Indemnity Insurance Summit, which convened on 23rd April 2002. The summits communique did no more than announce that work would begin on a range of issues that had been identified as early as the Tito report. You will recall the Tito report came from a review chaired by Fiona Tito and was established by the previous Labor Government in 1991, for a review of professional indemnity arrangements for healthcare professionals. To add to this Labor's Medical Indemnity package was released in July 2001.

There are a number of further issues that the government should be pursuing to address the medical indemnity insurance problems.

Firstly, the improvement to the quality and safety of medical practice by improving clinical outcomes and reducing clinical risk.

Little attention has been given to reducing the number of adverse events through the encouragement of safer medical practices.

It is logical then that improvements to the quality and safety of medical care will lead to better health outcomes for patients and as a consequence there will most likely be a reduction in doctors being sued for inappropriate treatment.

It is also essential that there be the establishment of a National system of long-term care for the most catastrophically injured.

Labor has advocated that a special scheme is necessary to address high-cost cases in which catastrophic injury has resulted from medical procedures—in particular, cases involving brain and spinal injury and obstetrics.

The number of people who suffer catastrophic medical injury is small but their needs are high and their costs are great.

Complex medical malpractice cases take years to resolve through the courts and waste millions of dollars in legal fees. These cases place a disproportionate burden on the costs of medical indemnity insurance. Having a catastrophic medical injury scheme would be a significant contribution to stemming exponentially increasing premiums for medical indemnity insurance.

Medical Defence organisation also requires assistance in obtaining reinsurance. This should be a significant role for the Commonwealth by assisting MDO's to secure reasonably priced reinsurance.

Australia has a multiplicity of generally State-based organisations that provide medical indemnity insurance. With a more united front, Australian medical defence organisations would be more likely to succeed in obtaining more affordable reinsurance and helping to keep the cost of medical indemnity insurance from exponentially increasing.

The Government should be more proactive in making changes to the way in which medical indemnity insurance is regulated.

Medical indemnity insurance is provided by a small number of state-based Medical Defence Organisations, which traditionally have offered doctors “membership” rather than “insurance”. For this reason, regulation by the Australian Prudential Authority (APRA) has until recently been poor.

The Government should also be preventing price exploitation as a result of increased premiums. There should be an increased role for the ACCC.

Patients are being asked to make large upfront payments by their specialists before surgical procedures are carried out with the explicit justification that these up front fees are necessary solely to defray the increased costs of medical indemnity insurance.

At the very least, consumers should not be required to pay amounts, which bear no relationship to the increased premium costs.

The Commonwealth should act to prevent price exploitation.

Labor will support the measures outlined in these Bills. It is undesirable for there to be any delays in their passage of these bills before the Christmas break.

This is not to say that the conduct of the Government in this matter has been commendable. The lack of foresight and common sense by the government on this matter has not only hindered but also complicated a resolution.


Senator BUCKLAND —I thank the Senate.