Medical indemnity update
On July 26 the Department of Health released further details on a review into Medical Indemnity. The original announcement accompanied a $36 million cut to indemnity funding in the December 2016 Mid-Year Economic and Fiscal Outlook.
The AMA at the time condemned the move to cut funding from schemes that have provided much needed stability to the sector, and the decision to do so ahead of the review taking place or understanding of the potential impact.
This Commonwealth support for medical indemnity stems from the crisis of the early 2000s – specifically the collapse of HIH Insurance in 2001 and United Medical Protection in 2002.
At the pinnacle of this crisis, many practitioners faced uncertainty about the future of their practice, and/or insurance premiums that would have made their practice unviable.
Patients may have been faced with uncertainty that, in the rare case of an adverse event, there may no longer be financial support for their ongoing care.
It is no overstatement to say the lack of stability was crippling the provision of healthcare – even threatening the ability of doctors to turn up to work.
Medical indemnity crises are not unique to Australia. Many countries have experienced difficulties at various times since the early 2000s, with escalating claims and costs, hampering confidence in the healthcare system. Even now in comparable countries this instability is occurring. In recent weeks there have been private Obstetrics in the United Kingdom threatened by the withdrawal of the two major mutual insurers there.
Since 2003, however, the Australian Commonwealth has provided funding towards a number of support schemes, some of which subsidise indemnity insurance premiums for medical practitioners. The initiatives were a response to a market failure and intended to make the indemnity market more sustainable, giving doctors the certainty they need to continue practicing, and making medical indemnity cover more affordable.
These initiatives were designed after significant intervention by the AMA, in conjunction with the broader profession. The schemes are a public policy success, and should be celebrated. They provide ongoing stability in a sector that suffers turbulence in so many other areas – freezes on patient rebates, inadequate indexation of no-gap and known-gap private health insurance payments, other funding constraints, ongoing and often piecemeal reform.
It would appear some of the AMA’s concerns have been heard by the Government.
As a result of direct advocacy by the AMA, the terms of reference and the preamble have moved beyond an ill thought out savings exercise. Instead they now look to better understand the success of the schemes, whether we can better support the schemes via improvements, and demonstrate an understanding of the link between Commonwealth support, and affordable, stable and universal health care provision.
Now the review is proceeding, the AMA is keen to ensure that the history behind the development of these successful schemes is not forgotten, and the ongoing stability they provide not downplayed.
There are two parts to the review: A First Principles Review of all the Commonwealth funded schemes under the Fund (including the Midwife professional indemnity schemes) and a Thematic Review of all the legislation underpinning the Fund’s schemes.
The First Principles Review will examine whether the existing arrangements are “fit for purpose” for all parties or whether changes can be made that better support the ongoing provision of indemnity insurance.
The outcomes of the First Principles Review will inform future policy concerning support for professional indemnity insurance for doctors and eligible midwives in private practice and contribute to the development of an appropriate monitoring framework to assist in assessing how the schemes are contributing to affordable access to health care.
The terms of reference for the Review are to:
- examine to what degree, in the current environment, Commonwealth intervention has been successful in providing:
- stability of the medical indemnity insurance industry;
- availability of affordable indemnity insurance for medical practitioners and midwives and by extension, the affordability of healthcare for patients;
- viability for professions, and patients, where claims have a ‘long-tail’ or high costs;
- assess whether the schemes that comprise the IIF continue to be fit for purpose for all parties, and where improvements might be made; and
- consider the appropriate level of Commonwealth support needed to continue stability, affordability and accessibility of professional indemnity insurance for medical practitioners and eligible midwives.
The Thematic Review of the Commonwealth’s medical indemnity legislation is currently underway. This is considering relevant indemnity legislation with a view to simplifying and streamlining the legislation. Anyone with an interest should contact the Department of Health for further information.
The Department of Health will contact stakeholders with further information about consultation mechanisms and timeframes.
It is critical that representative organisations engage in this Review. The success of the Australian schemes should not be downplayed, particularly in light of the significant turbulence other countries are experiencing with their indemnity schemes.
The AMA recently wrote to Presidents of the Colleges, Associations and Societies, encouraging them to keep a close eye for the Consultation Paper in mid-August and to respond.
More information can be found at:
For anyone seeking a well-written history behind the indemnity crisis and the resulting mechanisms put in place to provide stability, please see:
As the peak body representing the entire profession across Australia, the AMA understands the importance of a stable medical indemnity industry to private medical practice and to universal healthcare. The indemnity industry is professionally run, well capitalised and largely doctor-owned. The AMA will be working hard in advocating for measures that protect and sustain the industry into the future.
AMA SENIOR POLICY ADVISER
Published: 04 Aug 2017