The medical indemnity crisis is slowly but surely being sorted out, thanks to the unenthusiastic but nevertheless fulsome largesse of the Federal Government. Prime Minister John Howard announced a six-month extension of the Government’s guarantee to cover the expenses of failed insurer UMP and called on doctors to stay calm.

Mr Howard said the six-month extension will give the Government time to sort out the whole horrible mess, which would become a political disaster if the money supply dried up. “In a calm atmosphere and with goodwill, I believe we can sort it out,” he said.

He might need both after the Government conceded that it will have to impose a levy on doctors to help cover UMP’s IBNRs.

That brought a sharp retort from Australian Medical Association President Kerryn Phelps, who told a Brisbane rally that any costs imposed on doctors will inevitably be passed on to patients, “either through the Medicare benefits schedule, private health insurance premiums or consultation fees.”

“A levy will not relieve the pressure on high-risk specialties like obstetrics, neurosurgery or orthopaedics,” Dr Phelps said. “Any premium increases for these doctors will lead to a workforce shortage, particularly in rural and regional Australia.”

The rescue package includes plans to subsidise premiums for high-risk doctors and improve the financial reporting of medical defence organisations.