Medical Indemnity Insurance
Mr HUNTER: My question without notice is directed to the Minister for Health. What is the Government's response to doctors' concerns about the Commonwealth's insurance levy on medical practitioners?
Mr IEMMA: Since the United Medical Protection [UMP] crisis was first brought to public attention in 2001 the Commonwealth has been consistent in its approach—it has been totally inept. The latest so-called bail-out package is quite simply an insult to doctors. Recently letters have been sent to doctors outlining additional payments to cover the incurred but not reported [IBNR] claims. Many doctors are looking at between $120,000 and $200,000 payable over 10 years on top of their normal insurance premiums. These IBNR claims refer to treatment provided in the past that resulted in an adverse effect on the patient but where the patient has not yet made or reported a claim. This has also been referred to as the tail. This levy is a nightmare for doctors. For example, ear, nose and throat specialist Dr Josephine Motbey from Beecroft, a single mum of a six-year-old, stated:
The major factor in terms of costs is constituted by my medico-legal insurance subscriptions. I have had to close my ear nose and throat practice … as it was unviable. Now I have an IBNR bill of $130,045 over ten years or $100,784 if I pay before 1/11/03.
Dr George Kirsh, an orthopaedic surgeon at Bankstown, wrote to the Prime Minister as follows:
At present the HIC (Health Insurance Commission) has presented me with a letter asking me to pay nearly $24 000 per year in extra medical insurance premiums for the next 10 years. When you add this to the $110 000 I pay at present, this adds up to $134 000 per year … it is becoming less and less possible to practise as an orthopaedic surgeon or a surgeon of any type …
Senator Coonan, the Federal Assistant Treasurer, has attempted to portray its bail-out package as one that had been requested and endorsed by doctors. Nothing could be further from the truth. The Chairman of the Australian Medical Association's [AMA] Medical Professional Indemnity Task Force, Dr Andrew Pesce, has warned that the Commonwealth could start a whole new medical indemnity crisis throughout the country. He stated:
We warned against inflammatory short term fixes … (but) not one of these conditions has been met …
As a result, more doctors will leave the profession or cease providing important services and procedures. As a result, patients will pay more for their health care …
Doctors are telling the Commonwealth that they only have two options. First, they can leave the medical profession for a new career—an unrealistic choice for most, who have debts, mortgages and families; or, second, they can keep working, be sued and lose everything they have ever worked for. In New South Wales, United Medical Protection was the main provider of medical practice insurance. Around 90 per cent of medical practitioners were insured with UMP. In November 2001 UMP revealed that it had not made provision for up to $450 million of incurred but not reported claims. It then announced premium increases of up to 52 per cent.
The sticking point in the entire UMP controversy has been the cost of funding IBNR claims. As a result of recent world events, insurance premiums have risen dramatically. Action was needed at both Commonwealth and State levels. That is why the Carr Government took action to stabilise the situation in New South Wales by capping payouts, tightening the statute of limitations, introducing other extensive tort law reform, covering doctors for public work in the public system, covering rural doctors for private work in the public system, regulating the amount insurers can charge doctors practising obstetrics and neurosurgery, outlawing cherry picking in the industry, and meeting the IBNR tail of UMP and other medical defence organisations for public patient claims.
If the State Government had not introduced these measures our health system would have ground to a halt. Our approach to this crisis has been swift and comprehensive. In contrast, the Commonwealth has been slow to get off the ground. It introduced unnecessarily bureaucratic measures that were ultimately inadequate and unsustainable. Unlike New South Wales, the Commonwealth is seeking to claw back the outlay it makes to medical defence organisations for the IBNR tail. What a disgrace! The Commonwealth package has not had the desired effect of reducing general premiums to a sustainable point. The Commonwealth has also avoided fundamental issues relating to medical insurance. No wonder the Federal President of the AMA, Bill Glasson, said:
I've never seen the profession more angry in its whole life because what the profession is saying to the public out there, listen, we do have one of the best systems in the world, please come in and address the situation.
That is what he said to the Commonwealth. Doctors around the country have been receiving their bills from the Health Insurance Commission for coverage of their IBNR claims. These bills are an additional impost on an already short labour supply. We are all aware of the doctor shortage around this country, and, as a result of this levy, doctors are threatening to leave the profession and some are, in fact, leaving. If the Commonwealth does not address this crisis a number of communities across the State and the country will be left without adequate medical coverage. This shortage will be concentrated in areas such as obstetrics and anaesthetic procedures. Right across the country doctors are telling the Commonwealth Government that it must get its act together to try to address this crisis and save the medical work force, which is the backbone of our public health system.