The government have once again taken a very short sighted quick-to-please option. They are failing to tackle the reason behind the rising costs of indemnity - patient's lawyer's costs (often more than the compensation available) and increased litigation, and the fact that compensation is on the basis of the patient having to pay for private care even when that care is available on the NHS for free.
The money will come out of the health service budget and will impact on the funds available for patient care. The cost will be factored into GP contract negotiations and everyone will get paid less to compensate. It won't cover attendance at inquests or assistance with GMC complaints (which are on the up year on year).