THE HON TONY ABBOTT MP

MINISTER FOR HEALTH AND AGEING

Leader of the House of Representatives

Dear Doctor,

I'm writing to advise you of the Government's response to the recommendations of the Medical Indemnity Policy Review Panel. The new arrangements should deliver a sustainable, affordable medical indemnity insurance system.

In brief, the Government will:

• Extend the High Cost Claims Scheme to cover 50 per cent of all claims against doctors over $300,000 (which means that the Government, in effect, covers the cost of long-term care).
• Provide premium support to doctors through their medical insurers once actuarially calculated premiums exceed 7.5 per cent of gross private medical income (which means that premiums for most high cost specialties will fall).
• Provide additional premium support to GP proceduralists to keep their premiums within 25 per cent of standard GP premiums.
• Establish a government-backed Run-off Reinsurance Vehicle to meets claims against retired doctors, doctors on maternity leave or doctors who have been out of the medical workforce for more than three years (which will effectively provide claims-incurred cover).
• Replace the UMP IBNR levy with new UMP support arrangements capped at the least of the former annual IBNR levy, 2 per cent of gross private medical income or $5000 a year for a maximum of six years (which means that nearly three quarters of UMP's INBR liabilities will be covered by the Government).

The Government supports the Panel's recommendations for more tort law reform including the establishment of medical assessment panels before claims can go to the court. The Government will establish a new working party within 18 months to consider the effectiveness of these changes and whether further changes might then be necessary including the option of a monopoly, doctor-owned medical indemnity insurer.

These changes add $181 million to the $438 million the Government had previously committed to support doctors' medical indemnity costs over the next four years.

The Government believes that these changes mean that medical indemnity issues should no longer be driving doctors' decisions about whether or where to keep practising. I have great faith in doctors' commitment to their patients and am now confident that the profession will continue to serve patients in public hospitals and elsewhere with its customary dedication and skill.

The Government is talking to the medical insurers to ensure that their premiums reflect these changes. More detail on the Government's decisions is attached 

Yours sincerely

[signed]

TONY ABBOTT

December 18, 2003

• Implementation of the new arrangements will be undertaken in consultation with the medical profession and medical indemnity organisations.
• A working party will be set up in 2005 to evaluate the effectiveness of these new arrangements.