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Tuesday, 10 December 2002
Page: 7595

Senator HARRADINE (5:44 PM) —I rise to speak on the Medical Indemnity Bill 2002 and related legislation before the Senate. This legislation was brought on by the collapse of United Medical Protection and its subsidiary, Australasian Medical Insurance Ltd, on 3 May this year. Most of my concerns relate to a bill yet to reach the Senate, but these matters are all closely related. I understand that the Assistant Treasurer, Senator Coonan, will be consulting further with Tasmanian practitioners and the Tasmanian government to work through some of these concerns.

In my own state of Tasmania, the Medical Protection Society of Tasmania, which covers 80 per cent of practising doctors, has not had any financial problems and has been offering coverage to doctors for over 100 years. Under the changes proposed by the government, the Medical Protection Society of Tasmania and other discretionary medical defence organisations will have to move to a new insurance model. While I support making the regulatory system stronger to protect doctors and their patients from the risk of a medical defence organisation collapsing, I am concerned that this might mean fewer benefits to members for an increased cost, especially when the Tasmanian organisation has been run without apparent difficulty under the current legislation.

I am concerned that the legislation encourages medical defence organisations to offer the more limited `claims made' cover rather than the `claims incurred' cover offered by the Tasmanian MDO. Under a `claims made' cover, a doctor must be a member of the medical defence organisation not only at the time an incident occurs but also at the time it is reported to the defence fund. `Claims incurred' cover would allow doctors to be covered whenever the claim is incurred as long as they were members when the incident occurred. This is obviously a more flexible option. The `one-size-fits-all' insurance model will benefit those medical defence organisations which have found themselves in financial trouble but will lead to increased costs for the many successful groups offering coverage to doctors.

Once again, I support minimising risks through a good regulatory regime, but I am concerned that the poor management of some MDOs is impacting negatively on the cost of coverage for Tasmanian doctors. I understand that the Australian Prudential Regulation Authority has agreed that the new insurance model means that doctors may have court decisions awarding damages against them that are higher than their policy cover. That is obviously something that concerns medical practitioners and is something that will need further discussion with the Minister for Health and Ageing.

The new legislation is expected to lead to a rise in premiums for many doctors who had cover with funds who were not in financial trouble—who had made provisions for liabilities arising from incurred but not reported claims and who would be able to cover claims against their members. The Medical Protection Society of Tasmania estimates that its expenses in moving to the new model will be approximately $1 million in set-up costs, extra administrative fees of $500,000 per annum and an extra $5 million in capital. This is likely to cost each member of the Tasmanian group around $1,500 per annum for four to five years—and this is of concern to patients down the track. In the end, those patients will bear some of the impact from these increased costs. It is, of course, good that there will be protection against the possibility that an MDO may collapse, but the average Tasmanian will be paying for this as costs are passed on to them. The Medical Protection Society of Tasmania is not unregulated; it is subject to Commonwealth and state corporations legislation. Perhaps a system of prudential regulation can be negotiated which can build on this regulation while having a smaller impact on costs, or the impact of the transition to the new regime can be minimised.

I will not repeat what I have said before about midwives but, as I have also said before, I am very disappointed that midwives are not included in this medical indemnity package, and I urge the government to do so for all the reasons that have been given. I fully support the need for the government to address the problem of medical indemnity but I want to highlight the impact of these changes and the concerns of my constituents. I urge the government and, in particular, Senator Coonan to talk to the Medical Protection Society of Tasmania, the state branch of the AMA, and other interested bodies so that their concerns can be taken into account in establishing this new legislative regime. I have received correspondence from Senator Coonan to say that that is her intention, and I look forward to hearing further on how the consultations are proceeding.