Dr Kerryn Phelps, AMA President at Parliament House, Canberra

31 May 2002

QUESTION: Will doctors be prepared to pay this levy?

PHELPS: Well, doctors are going to have to look at the details of this levy proposal. At this stage we don't know how much it is, who has to pay, when it has to be paid and the proviso I would put on payment of that levy would be that we would have to see comprehensive Commonwealth and State reforms which would make that tail a more manageable amount of money and also ensure the long term sustainability of the industry. There's no way doctors will just pour money into a black hole unless we get those reforms.

QUESTION: Can you explain your understanding of what the Government has promised in terms of the tail?

PHELPS: What we understand is that the Government has guaranteed the tail prior to any claims that arose before January 1st 2001 and that they are increasing the length of guarantee from April 29th to June 30th but on a different basis through to December 31st.

QUESTION: So does that mean that, how can any future government be bound by that guarantee?

PHELPS: Well the Government is going to have to put in place legislation that will ensure the security of that guarantee.

QUESTION: Can you at this stage assure us that all doctors will be prepared to continue working?

PHELPS: I don't think anybody in this country can guarantee you that all doctors in Australia will be prepared to continue working. We have a number of more senior doctors who are considering whether now is the time for them to retire. They'll have to have a look at their options and at least now I think they have a few months up their sleeves that they can renew their insurance with UMP or they can change to another MDO, whatever they decide is best for them. And they can make decisions about their long term futures.

QUESTION: Is there a danger that some doctors, like those involved in obstetrics, may actually stop working because of the levy? That this promise by the Prime Minister isn't going to work?

PHELPS: As far as obstetrics is concerned, that ball is already rolling. We have a lot of obstetricians who are giving up obstetrics, who have already given up obstetrics, who are retiring early. We have young doctors who are deciding not to go into obstetrics as a specialty and that damage will never be repaired. I think it's time that the government took a very long term view of what can be done to save that essential specialty.

QUESTION: Is this going to save UMP?

PHELPS: There's no question that UMP provided it is able to renew its insurance policies come Monday or Tuesday, when it goes to Court, will be able to ride through past June 30th. The APRA requirements will not be an impediment to the continuation of UMP.

QUESTION: as a result of the levy?

PHELPS: There's no question that patients will have to pay more to go and see the doctor. Any levy, any increased cost to doctors must be passed on in terms of either increased Medicare Benefit Schedule Rebates or increased gap payments by patients or increased private health insurance premiums.

QUESTION: This seems very much like another short term solution. What post December 31st, what's going to happen then?

PHELPS: This is a short term solution but it's an important one. And I don't think that we can be entirely negative about this. I think it's very positive that the Government has taken some control of the situation and provided a guarantee until the end of December. However, the long term reforms that we need are absolutely essential and Commonwealth and State Governments will need to cooperate with each other and with the medical profession in a way that perhaps they have never done before.

QUESTION: What do you see needs to be done?

PHELPS: OK. What needs to be done is that the Commonwealth needs to put in place a scheme for the care and rehabilitation of the severely injured. They must introduce the Structured Settlements legislation that they have committed to. The State Governments must introduce a Statute of Limitations that is, that makes sense. It must be around the three to six year mark. It can't be the current 25 years or unlimited that it is in some States. The States also need to put in place comprehensive tort law reforms around things like thresholds and capping and the way that the Courts deal with these medical negligence cases. And we also need, I think as a nation, to redefine what medical negligence is because there's been a real creep of the definition of negligence to include things that no reasonable doctor could possibly agree was negligence.

QUESTION: Doctors in Queensland have said that unless there's major changes to the laws they will be closing their doors on June 30th. Will this change their mind?

PHELPS: I'll be going to speak to the doctors in Queensland first thing tomorrow morning and I'll be listening to what they have to say. I'll be giving them the AMA's analysis of the news that we've been given today and we'll make a decision as time goes by what advice we are able to give to doctors. But certainly what we will be looking to do is to try and preserve health services for patients right around Australia. I don't think any State can be complacent. The problem came first in NSW and Queensland because that was where the UMP had the majority of doctors insured with them. But there is no MDO and there is no State that can hide from this problem in the long term unless we get fundamental reform.

QUESTION: Will doctors have to pay their medical insurance anyway? Does this levy take the place of their insurance premiums or it's in addition to their insurance premiums?

PHELPS: I think you will find that indemnity premiums will rise for all doctors in Australia because the industry is such that the premiums will need to cover the cost of claims. In order to contain that cost that's why we need those reforms. The levy will be on top of those premiums because the levy is to cover the unfunded tail.

QUESTION: Does the government scheme have to be endorsed by the Court?

PHELPS: The government scheme has to be endorsed by the Court. I believe it's going to the Supreme Court on Monday or Tuesday of next week and the Court will then decide whether or not UMP is able to offer renewals.

QUESTION: And your confident it will be able to?

PHELPS: Oh gee, we hope so because it's going to be chaos if they don't

QUESTION: How would you sell off what the government's come up with today?

PHELPS: I think the government's come up with a short term package. It's very welcome but it's a work in progress.

QUESTION: There seems to be conflicting views about whether doctors are actually having trouble getting insurance outside of UMP. Are many doctors having trouble?

DR PHELPS: There are some doctors who are having trouble getting affordable insurance outside of UMP and I think that's one of the areas we need to look at in terms of reform of the system. The government has also raised the possibility of subsidies for the higher risk specialties like obstetrics and neuro surgery and we would certainly welcome those discussions getting underway as soon as possible because we have to do something to preserve those specialties because they're dying.

QUESTION: On the issue to the tail, couldn't Australians be exposed to billions of dollars? I mean you really don't have any figure that you can put on what, what sort of claims there could be on that. Is that the case?

PHELPS: Er, there will be a limit on it because there is an estimate that the actuaries are working on. The UMP liquidator has yet to announce what that might be. But I think probably within the next month or so we can expect UMP to announce what the amount of that tail is at the moment. Bear in mind that if we get the reforms we are talking about that tail will come down.

QUESTION: Is there any indication of how much more money, how much more taxpayers money is now at risk now the government's extended its guarantee?

PHELPS: Well the way this has been constructed, er, provided UMP is able to keep trading, there is no taxpayers money at risk except for the money that people will have to pay out of household budgets for increased medical costs and for increased private health insurance premiums.

QUESTION: Can you estimate how much doctors fees might go up as a result of this?

PHELPS: It'll depend on the specialty involved. I think we can probably say there'll be an acceleration in the decline of bulk billing. There may well be a decline in the number of doctors prepared to be engaged in no gap products with the health insurance funds because they won't be able to cover their cost and pay for the levy and pay for their increased premiums, and engage in no gap products. So we either need to see a revision of the Medicare Benefits Schedule to account for these increased costs. The private health insurance companies are probably going to have to do their bit and probably household budgets are going to have to do their bit too.

QUESTION: But you can't put the dollar figure on it?

PHELPS: It's impossible to put a dollar figure on it as an individual or as an organisation that doesn't have access to UMP's figures. The actuaries have been working on it for over a month now, and we are told there should be an answer within a short period of time how much that tail is. But I will repeat that the tail, in order for it to be manageable, will take Commonwealth and State tort law reform.

Thank you very much.


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