Indemnity insurance levy
threatens public hospitals, Medicare

by Bob Briton

While a postponement on the payment of the first instalment of the medical 
indemnity insurance levy has been announced, doctors are refusing to accept 
the genuineness of the Federal Government's apparent concession. They 
justifiably point out that the 18 months moratorium takes the issue to a 
period after the next elections. They fear that the Government, if re-
elected, will then proceed with the implementation of its agenda.

The objective of the Government is to undermine public health care, not 
just Medicare, and force doctors out of the public system and into the 
private hospital system.

The Australian Medical Association says that the Government's latest 
manoeuvre will not stem the flow of resignations of specialist surgeons 
from public hospitals. In fact, the crisis now centred in NSW, is 
threatening to move to other states.

The AMA has called on the Government to establish a timetable for 
structural and financial changes to medical indemnity. Doctors want an 
expert committee established to review all the options and to report back 
in six months. Staff specialists and GPs are joining private surgeons in 
rejecting the Federal Government's moratorium.

New system

A "no fault" system similar to that in place in New Zealand should be 
considered together with the right of patients to take legal action and for 
negligent doctors to be penalised if found guilty.

The present system of insurance indemnity is obviously not working. 
Furthermore, to the extent that the present system is retained, premiums 
should be the responsibility of the employer. In the case of public 
hospitals it is the federal and state governments. (It is employers who 
have to pay premiums for workers' compensation so governments should pay 
similar premiums to cover doctors in public hospitals.)

Huge insurance premiums are gradually forcing doctors out of public 
hospitals and into private hospitals which is what the federal government 
intends. Private hospitals pay higher salaries to doctors and, with higher 
salaries, they can more easily pay high indemnity insurance charges.

But an inevitable consequence is a substantial increase in fees charged to 
patients as doctors attempt to claw back the extra insurance charges. The 
AMA predicts that it could add hundreds of dollars to the cost of a 
consultation with an obstetrician, for example.

Hospital closures

Acting NSW Health Minister Frank Sartor said that there was a risk that 
hospitals would have to close and that the already long queues for elective 
surgery would lengthen.

The Doctors Reform Society (DRS) warned that the lives of mothers and 
babies were are risk thanks to the bungling of the indemnity insurance 
crisis by the federal government. This could result from the decision of 
trained professionals to leave their practices and the inability of 
midwives to obtain insurance.

Working class families

But resignations are mostly taking place in the public hospitals in the 
working-class western suburbs of Sydney where most families cannot afford 
private health insurance. It is working class families that would mainly 
suffer from a closure of public hospitals in that area.

Former Federal Workplace Relations Minister and chief head-kicker for the 
Government, Tony Abbott, was forced to act in an attempt to at least delay 
the damage being done to the federal government by the breakdown in public 
hospitals resulting from the resignations. The pugnacious neo-liberal tried 
to defuse the present crisis by deferring for eighteen months the 
introduction of the federal government's levy to be paid by specialist 
doctors.

However, the Federal Government is maintaining levy payments by doctors up 
to $1000. The only levies being postposed are those over $1000 per year. 
This means that about 80 percent of doctors would continue to have to pay. 
This is, perhaps, a scheme on the part of the federal government to bring 
about a split among doctors.

It was the growing radicalisation of doctors, including specialists, which 
forced the government's hand.

The insurance levy is designed by the Federal Government to recoup the 
estimated $460 million in unfunded liabilities it has agreed to cover on 
behalf of Australia's biggest medical indemnity organisation, the failed 
United Medical Protection. The liabilities in question are claims that may 
yet be made for malpractice during medical treatment provided in the 
fifteen years leading up to the year 2000.

Hardest hit by the levy will be specialist surgeons, such as obstetricians 
and neurosurgeons. The Australian Medical Association (AMA) reports that 
the 30,000 doctors affected by the levy have already received their bills 
for between $50,000 and $260,000, to be paid over the next ten years. This 
cost is on top of what they have to find for their indemnity insurance.

Dr Neil Wallman, an obstetrician practicing on NSW's Central Coast, is 
typical. He pays $140,000 a year in indemnity insurance and will be 
expected to find an extra $22,000 a year for the next ten years for the 
levy. For many the new tax was the straw that broke the camel's back.

Health needs overlooked

Up to the time of Abbott's "concession" the federal government maintained a 
posture of unyielding confrontation. Every authoritative claim from 
doctors' organisations about the consequences of the levy was rejected and 
the action of individual doctors in resigning was described as "contrived". 
The needs of the public for health care were completely overlooked as the 
Government resorted to mudslinging instead of dealing with the practical 
issues.

Only the very real possibility of a meltdown of public hospital services 
and the unity of doctors — clearly visible in their 4000-strong protest in 
Sydney on September 28 — brought about some change to the Government's 
unacceptable stand on the issue.

However, the Howard Government's determination to undermine Medicare and to 
promote private health care and private hospitals should not be 
underestimated.

Speaking to The Guardian last week, Doctor's Reform Society 
president Dr Tim Woodruff summed up the levy fiasco this way:

"It certainly fits with the agenda of the Howard Government since it came 
to power to strengthen the private sector and to weaken the public sector. 
Just like their absence of action on general practitioner rebates and 
general practitioner working conditions that has led to a decline in bulk 
billing, so their lack of appropriate action to address the medical 
indemnity crisis is leading to a decline in the services that can be 
provided in a public hospital. It suits their purpose, which is to destroy 
Medicare."