Fed: Govt releases details of medical indemnity levy
CANBERRA, Aug 1 AAP - The federal government today released details of its levy designedto fund part of its medical indemnity rescue package.
The government was drawn into the medical indemnity crisis last year after the collapseof United Medical Protection (UMP), the biggest doctor insurance group in Australia.
As part of a rescue package last year, it guaranteed to cover unfunded future liabilities- known as incurred but not reported (IBNR) liabilities - for medical insurers withoutsufficient reserves.
However, it said it would recoup the cost by a levy on doctors with these insurers.
Assistant Treasurer Helen Coonan said that it was likely that if the levy was not introducedUMP would have been placed into full liquidation and doctors would be required to meetfuture claims out of their own pockets.
UMP is in provisional liquidation and liquidator David Lombe is attempting to restructurethe organisation.
"This situation presented a very real possibility that doctors would have faced bankruptcyand patients would not have received the damages to which they were entitled," SenatorCoonan said.
She said the government had fully upheld its end of the bargain to help resolve themedical indemnity crisis.
Under the government levy plan, retiring doctors and those on less than $5,000 in medicalincome a year would be exempt from the levy.
The government would meet the cost of this exemption, worth around $120 million.
Initial indications were that four out of five potentially liable members would payno more than $1,500 a year and the levy would be tax deductible.
Doctors who had bought replacement cover for their UMP cover prior to July 1, 2003,would also be exempt from the levy, as would doctors who have their liabilities coveredby state or territory governments.
"Doctors who have left private practice before 1 May, 2002, and taken up full-timesalaried public hospital positions will be exempt," Senator Coonan said.
She said the government had also decided the levy would only apply to doctors coveredby UMP in 2003/04.
"This means that no IBNR contribution will apply in 2003/04 to doctors who were membersof other MDOs (medical defence organisations) as at 30 June 2000," she said.
Senator Coonan said the government continued to work with the states and territoriesto examine a scheme to deal with the long-term care of people who suffer catastrophicinjury.
"The federal government has also been working with the states and territories for nearly18 months now to bring the laws of negligence back into balance with public expectationsand opinion," she said.
AAP so/sb/ldj/jlw
KEYWORD: INDEMNITY
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