The Guardian May 8, 2002

Doctors' insurance bailout is a cop-out

by Anna Pha

Media reports last week claimed that some hospitals had cancelled up to 
half of their scheduled operations. This was not the public hospital 
system, it was not due to a shortage of beds or staff. It was the private 
hospital system facing an unprecedented crisis as medical practitioners 
withdrew their services in fear of going bankrupt without adequate 
indemnity protection.

Approximately 32,000 medical practitioners have indemnity coverage with 
United Medical Protection (UMP). Last Friday, May 3, a provisional 
liquidator was appointed to UMP. While the government is still hoping that 
UMP can be saved, the doctors are not so confident about its future or how 
they will receive protection from common law actions.

Many doctors did continue working, relying on a verbal promise from the 
government to give them cover against incidents between April 29 until June 
30. What happens after June 30 is still unknown.

The collapse of UMP is said to be due to a depletion of capital reserves at 
a time when the insurance sector is facing increased demands. There are a 
number of other specialised mutual funds providing doctors with medical 
indemnity cover but these apparently feel inadequately capitalised to be 
able to step in and take over UMP's customers.

The commercial insurers such as Axa and the Insurance Australia Group 
(formerly NRMA Insurance) are sitting on the sidelines demanding "reforms" 
before being willing to step into this area of insurance.

They are demanding legislation to severely restrict the common law rights 
of victims of medical malpractice and negligence. They would like to 
restrict who can make claims, what they can claim for and how much they can 
claim. They want to make sure that medical indemnity insurance becomes 
highly profitable with little risk to their profits.

The government can be expected to accede to their demands and respond with 
legislation. Since UMP's collapse, other insurers covering the medical 
profession have hiked up their premiums, in some cases by as much as 65 per 
cent. Obstetricians and neurosurgeons, in particular, are facing massive 
insurance bills in the six-figure range.

The changes being demanded by the commercial insurance sector are similar 
to those the industry is demanding in other areas of insurance.

Already we have seen the introduction of caps or ceilings on payouts to 
victims of accidents in a workplace. Governments have reduced access to 
common law for workers' compensation and also reduced payments for various 
categories of injury.

The aim is to reduce the cost of insurance premiums for employers and to 
shore up the profits of the insurance sector. In the medical sphere the 
insurance sector is deliberately holding back and blackmailing the 
community and the government to bring about the changes it is demanding.

The media are coming to their aid, playing up the crisis and the threat of 
the withdrawal of services of GPs as well as surgeons and other 

They conveniently omit to mention that it is the private health system 
which is in crisis.

Services are continuing as normal in the public health system where doctors 
have coverage through state funds and do not need to pay for their own 
private indemnity cover.

The present crisis is an indictment of the private health system. It is 
typical that at a time of crisis the private sector turns to the public 
purse for a bailout of hundreds of millions of dollars.

It is yet another example that shows how much more efficient and reliable 
the public sector is.

The private insurance sector is one of the most parasitic of all sectors of 
the economy.

There are far better ways of dealing with incompetence, common negligence 
or malpractice by medical practitioners than huge payouts to victims 
through a private insurance system.

Patients are in the long run paying a high price for that insurance through 
higher fees and also a hidden price in that the incompetence, negligence or 
malpractice of a doctor often goes unchallenged because of exorbitant legal 

It would be far better to have a system where the performance of doctors is 
guaranteed by other means, such as retraining or even deregistration where 

A public health system not only offers full protection for the medical 
profession but it also offers more reliable services to the people.

Treatment, rehabilitation and assistance to families should be a right 
provided by a government taking responsibility for its people.

The health and well-being of people should not hinge on the bottom line of 
an insurance company. It should not be a source of yet another layer of 
profit for the private sector.

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