The Minister for Health and Ageing, Senator Kay Patterson, and the Minister for Revenue and Assistant Treasurer, Senator Helen Coonan today announced details of the threshold for the Blue Sky Scheme for large medical indemnity claims. The Scheme was announced by the Prime Minister on 23 May 2003.
Under the Scheme, the Government will assume liability for 100 per cent of amounts payable by a doctor that exceed the threshold of the Blue Sky Scheme. The scheme would indemnify a doctor, who has a medical indemnity policy, for the same events and activities, and subject to the same conditions, covered by the policy.
The threshold for the scheme will be $20 million and will apply to claims notified under medical indemnity contracts of insurance from 1 July 2003.
"The Government has put in place a comprehensive package of reforms to provide doctors with confidence in their medical indemnity arrangements and to ensure the continued delivery of essential health services to all Australians," Senator Patterson said.
Senator Coonan said, "In setting the threshold, the Government has been mindful to encourage medical defence organisations (MDOs) to offer the maximum amount of cover that can feasibly be sourced from the commercial reinsurance market.
"Information provided to the Government indicates that all MDOs intend to offer cover of at least $20 million from 1 July 2003.
"$20 million is greater than the highest ever award for damages, which was in New South Wales for less than $15 million. Reforms to the law of negligence will place further downward pressure on compensation payouts. Setting the threshold at $20 million means that the likelihood that the blue sky scheme will be called upon to pay claims is low," Senator Coonan said.
The threshold will be reviewed next year to take account of the level of cover offered by MDOs. The Blue Sky Scheme will be reviewed after 3 years to determine whether it remains necessary in the light of State and Territory tort law reform and claims trends.
To ensure complete continuity of coverage, for medical indemnity cover that has been provided exclusively by way of contract since 1 January 2003, the threshold will be set at $15 million for claims notified in the period 1 January to 30 June 2003.
"The Government understands that many MDOs are preparing to send out 2003-04 policy offers to doctors. Today's announcement will enable doctors to make assessments about the level of cover required to provide complete comfort about future claims." Senator Coonan said.
The Government continues to work through the remaining details of the Blue Sky Scheme, including the arrangements for the ex post charge to fund the Scheme, with medical indemnity providers, doctors and other stakeholders, as a matter of priority.
The Government will shortly introduce legislation to give effect to the Blue Sky Scheme.