The Federal Government has advised there will be an increase to the High Cost Claim Scheme (HCCS) threshold, with it moving from $300k to $500k per claim with effect 1 July 2018.
The HCCS was introduced following the medical indemnity crisis of 2000 and its aim was to assist with the affordability of medical indemnity insurance. It does this by the Federal Government (via general revenue) contributing 50% of the cost of claims over an agreed threshold which is currently $300k There is no charge for this benefit to doctors, hence the HCCS allows premiums to be lower than they otherwise would be.
The practical impact of this change is that insurers will need to fund 50% of the cost of claims between $300k and $500k that at the moment is funded by the Federal Government (i.e. up to an additional $100k per claim). Above $500k each claim will continue to be funded 50/50 by the insurers and the Federal Government.
The cost of this change will need to be built into premiums for doctors. Based on financial modelling we expect at this stage the impact will be modest (approx. 3 to 4%).
It’s very important to consider the change to the threshold in the context of where we have come from since the Federal Government intervened with financial support for the industry and doctors.
15 years after the HCCS was introduced the medical indemnity environment and doctors’ medical indemnity premiums have stabilised and insurers are well capitalised. In a community context the current cost of the HCCS to taxpayers is estimated to be in excess $50 million per year and $475m to date across the life of the Scheme.1
MIGA is acutely aware of the importance of there being a balance between the interests of our members in having affordable and secure medical indemnity insurance and the intent of the Federal Government to lessen the level of financial support for the industry.
MIGA is working with the Federal Government on behalf of our members to address these and other matters in an open and constructive way. We don’t feel that scare tactics and statements about ‘hikes’ in doctors premiums assist to progress the debate in a mature way.
The HCCS is one of a number of schemes which impact on the price of doctors’ medical indemnity insurance premiums, and it is important to constructively engage with the government to ensure a whole of system approach to the review of the indemnity insurance schemes. There is a broad review of the medical indemnity legislation and the schemes underway and MIGA is actively involved in this process, with the aim of representing our members’ interests fairly.
It’s very important to MIGA that any further changes to the medical indemnity schemes and decisions about funding and liability outcomes for any state based National Injury Insurance Schemes (NIIS) are considered concurrently. We understand that doctors face a range of cost pressures across the board and the complex interactions of all of these need to be considered and carefully managed.
We will keep our members informed about the matters under review via our Bulletins and website.