Dr Kerryn Phelps, AMA President, Parliament House, Canberra

We're very worried, particularly about doctors who are going to retire, that they will be having to pay medical indemnity premiums in many cases for the rest of their lives under this current legislation. And to think of any other worker in Australia who would be expected to provide full professional indemnity insurance for themselves in the event that they were sued at any time in their lives after retirement, is just unthinkable.

And there are now going to be about half of Australia's doctors, about 25,000 medical practitioners, who will be facing the prospect of signing the cheques for the medical indemnity insurance on 1 January 2003 - just a couple of weeks away. And they are not facing, at the moment, a very secure future. So we have taken these concerns time and again to the Government. At the moment they don't appear to be heeding this concern and we wanted to make the point very strongly that doctors are very worried about the possibility of death, disability and retirement.

The second concern we have is that doctors who were going to be signing up on 1 January next year are going to be buying a product that is not what they were buying last year. They were getting insurance coverage plus discretionary assistance of an unlimited amount. This year they are getting a capped insurance product which will not exceed $15 million.

Now, one of the problems for doctors in having a capped insurance product is that they may well in the future have claims that well exceed that $15 million cap. And so we're going to see doctors either not being able to afford that insurance or go in bare and stripping their assets, which will mean that patients are not covered.

We have some solutions to this problem. We have to see the fast-tracking of a long-term care and rehabilitation scheme for people who are severely injured. We must see comprehensive tort law reform in every State and Territory, and we want to see the Government address this issue of retirement of doctors and perhaps pick up insurance for doctors after their retirement.

QUESTION: Are you pursuing amendments to this medical liability legislation? And what will they be?

PHELPS: Well, we'll certainly be pursuing some amendments to the liability legislation. We are very concerned about the fixed cap on the insurance products. We are particularly concerned about the issues for doctors on death, disability and retirement. So we'll be looking for amendments around those issues.

QUESTION: The federal taxpayer will be shelling, out over the next four years, $200 million to doctors to cover them for medical indemnity. How much do you want the taxpayers to pay for doctors?

PHELPS: So far the taxpayer hasn't paid a cent for medical indemnity.

QUESTION: But they will be in four years.

PHELPS: The Government has said that they will be levying medical practitioners to cover the IBNR so the money will be coming from taxpayers indirectly. If they happen to be sick taxpayers, through increased medical fees. Because those fees will be coming for the levy from doctors. And so the bottom line for the Government at this stage is not a particularly expensive one, but it is a cost to the medical system to provide medical indemnity insurance.

What we would like to see are better disability services, so that people who are injured by accidents or negligence or for any reason and require disability services, get those services. But not 10 or 15 years after the incident. They need to get it immediately the incident happens so that they can get the most effective care and rehabilitation.

QUESTION: Helen Coonan estimates that it would take up to a year for that Heads of Treasury Working Group to even get a first cut of what a long-term care scheme might look like. Is that an acceptable reasonable timeframe?

PHELPS: As long as we're seeing movement in that direction we're satisfied. Any timeframe beyond that, I think, will be starting to get out of hand.

QUESTION: What are the chances that doctors will stop work or not sign up to these new contracts by 1 January?

PHELPS: Unless doctors strip their assets they have no choice but to sign up for medical indemnity. And they'll be obviously looking for the best package that will cover them professionally over the next 12 months. But this situation will not go away under the current legislation.

We are very appreciative of the moves that the Government, in particular the Prime Minister's Medical Indemnity Task Force has made. We are appreciative of the moves that have been made in some States towards tort law reform. But we haven't seen the perfect package in any State or Territory yet, and certainly the Federal Government's indemnity package to date is not perfect. We need to see solutions that will work in the long-term. Now short-term measures are fine if we're getting in place things like the long-term care and rehabilitation scheme. I think it is urgent that we at least get a pilot up to see whether we can make a system like this work.

QUESTION: What about the levy? Has the Government yet told you what sort of quantum the levy will be?

PHELPS: Doctors don't know what quantum the levy will be. We've said from the outset that we're very concerned about any levy. And we will in fact object to any levy being raised against doctors when we don't know what the amount of that levy will be and we don't know what it's actually going to pay for.

If it's just going into a black hole in the absence of tort law reform, then obviously we're going to have to say no. If it's - and what will happen? Well I think that a lot of doctors will be reviewing their future in medicine.

QUESTION: Did you want to say anything about Kyoto?

PHELPS: Certainly. The AMA has officially called for the Government to ratify the Kyoto Protocol on public health grounds. We believe that environmental and climate change will be one of the major public health issues for the globe in the future. And the AMA on public health grounds is asking the Government to ratify the Kyoto Protocol.

All European Union countries ratified the Protocol this year in 2002. Canada on 10 December, just two days ago, indicated that it will be ratifying the Kyoto Protocol. Russia has said that they intend to ratify. And I believe that for Australia to stay in step with the rest of the world on climate change, that it's something that we should do. That Australia should make a commitment to doing and just get on with it.

QUESTION: Have you discussed at all with the Government the levy? Are they not telling you? Or what happened?

PHELPS: We've discussed the levy ad nauseam with government, and we just kept being told we don't know what the levy will be yet because we don't know what the level of the IBNR will be.

Now, the more tort law reform we can get in place the more legislation that brings commonsense into medical indemnity the better, because that will contain the outstanding claims. The IBNR. What remains a concern is the doctors who are planning retirement who are thinking, "Well, am I going to have to save up a half a million dollars? A million dollars more in order to be able to retire?' Now, we think that the fair and reasonable thing is for medical indemnity premiums to cover doctors in their retirement, and that after a certain period of time that the Government should step in and take over any claims that come up after a certain length of time.

QUESTION: Do you have an estimate on the cost of that?

PHELPS: No, we haven't at this stage, because once again it's an unknown just as the IBNR is an unknown. What we need is structural reform so that these problems don't continue to arise in the future.

QUESTION: Does it concern you that the Private Health Insurance Industry managed to lose $60 million last year?

PHELPS: I think it's a major concern that the Private Health Insurance Industry lost such a great amount of money. However if you take Medibank Private out of the equation, there was an overall profit. So clearly there needs to be some change in Medibank Private and to turn their fortunes around.

We strongly support a melding of private and public. And I think it's very important that we have a balance of the two systems for Australia. We have plenty of examples internationally of entirely public sector services that don't meet the needs of the population. Similarly, a substantially private sector, as we have in America, doesn't meet the needs of many people in the population.

Australia has a health system that is the envy of many systems in the world. And I believe in order to maintain that balance, we have to have a healthy private and public sector. Unfortunately, when you look at the reasons behind the increase in costs, we're going to probably see a premium hike. This is because the cost of providing medical services outstrips CPI consistently. And so that needs to be addressed. And all roads lead back to the Medicare Benefits Schedule.

The Medicare Benefits Schedule is out of step, medical - private health insurance rebates are linked to the Medicare Schedule. And unless we get a review of the Medicare Benefits Schedule so that it reflects the reality of providing services, then we're going to continually see these sorts of problems.

QUESTION: Hospital specialists have done very well in the last few years because of gap cover. Their benefits paid for extra gap cover have skyrocketed. Are you concerned about the increase in differential between what hospital specialists get and what GPs get?

PHELPS: Well, I don't think it should be a war between different brands of specialty. But there's no question that GPs are disadvantaged under the current arrangements and when you look at what general practitioners do, they are specialists in preventive care. They are specialists in primary care.

And if we can keep people healthy in the community, then we will have less need for them to be treated acutely in hospitals. So it's the hospital setting where you have a lot of the expensive services and these are things like the high costs of intensive care, high costs of for example cardiac services and so forth. Whereas if we can put prevention in place early on, and that really revolves around a GP working in the community and hopefully supported by adequate allied health services, then I think we're making the appropriate investment in Australia's future health.

QUESTION: And have you or will you be lobbying Labor not to meddle with the 30% rebate?

PHELPS: Well, Labor's done a bit of a backflip on the 30% rebate. It was not so very long ago that they were saying that they supported it. We believe that the 30% rebate should stay in place until we see a better policy. And we haven't seen one yet coming from the Government or the opposition.

And if you remove that 30% rebate, we think that private health insurance can well become unaffordable for a lot of families who are struggling to pay the private health insurance bill now. If they then become dependent on the public health system, it will cost, our estimates say, about double the $2.3 billion that the Government is currently putting into that rebate to provide those services, particularly tertiary services in the public sector.

So it's not as easy as it sounds. There is no easy answer to this, except to say that if we want first quality health care in Australia, we're going to have to pay for it. And taxpayers are going to have to become accustomed to contributing more to health.

QUESTION: Would you object to the idea of means testing the rebate?

PHELPS: I don't think that any possibility should be off the agenda. But we need to look at what the implications of that means test might be. I think that the rebate is appropriate. It is, after all, a tax concession. And it's in some ways a reward for people who are prepared to - or in a position to be able to pay somewhat more for their health care than others who either choose not to or are unable to.

So the important point to make here is that we must have a healthy blend of the private and public health sectors. In order to do that we need to provide incentives for people to stay in private health, and the private health rebate is one way of doing that.

If you remove that incentive then people will become dependent on the public sector and that costs money too. So it's really a matter of finding the right balance. We haven't seen a better policy yet.

Thanks.

Ends