Personal Injury Law

Med Mal Insurance Profits Up, Claims Are Down, Study Finds

By Jane Akre

Study: No Basis To Limit Liability 

A major study released today by a coalition of nearly 100 consumer groups, finds that medical malpractice premiums and claims for doctors have dropped significantly in recent years at the same time as the insurance providers are enjoying record profits in a time of global economic collapse. 

Americans for Insurance Reform, represents groups from around the country that support strengthening state oversight of insurance industry practices.

The report, "True Risk: Medical Liability, Malpractice Insurance and Health Care" was prepared by Gillian Cassell-Stiga and Joanne Doroshow of the Center for Justice & Democracy, and actuary J. Robert Hunter, who is Director of Insurance for the Consumer Federation of America (CFA), former Commissioner of Insurance for the State of Texas, and former Federal Insurance Administrator under Presidents Carter and Ford.

The study finds that medical malpractice premiums are the lowest they've been over the last 30 years.  At the same time claims are down 45 percent since 2000.  

Actuary Hunter says "The periodic premium spikes we see in the data are not related to claims but to the economic cycle of insurers and to drops in investment income. Since prices have not declined as much as claims have, medical malpractice insurer profits are higher than the rest of the property casualty industry which has been remarkably profitable over the last five years."

Tort Reform

As part of the tort reform movement, many states have imposed caps on awards or made it more difficult for people injured by medical malpractice to file claims. 

For example in Texas in 2003, the Texas insurance commissioner promised that if damages in medical malpractice cases were capped, rates would be reduced up to 19 percent.  Caps were passed in Texas limiting pain and suffering to $250,000.

Hunter acknowledges that tort reform has not reduced premiums.  "Our study also shows that states that have passed severe medical malpractice tort restrictions on victims of medical error have rate changes similar to those states that haven't adopted these harsh measures."

After Texas capped pain and suffering, major insurers requested rate hikes as high as 35 percent for doctors and 65 percent for hospitals, reports the Houston Chronicle. 

Hunter says if Congress eliminates medical malpractice lawsuits, consumers would be hurt but nothing else would change.  "The costs of medical error and hospital-induced injury would remain and someone else would have to pay."

Tom Baker at the University of Pennsylvania School Of Law, writing in the New York Times last week says, "When it comes to rising medical costs, liability is a symptom, not the disease. Getting rid of liability might save money for hospitals and some high-risk specialists, but it would cost society more by taking away one of the few hard-wired patient safety incentives."

Earlier this month, Public Citizen issued a study that showed for the third straight year, medical malpractice payments were at record lows. It concludes the decline is due to fewer injured patients receiving compensation, not improved health safety.

Joanne Doroshow, Executive Director of the Center for Justice & Democracy, asks, "Where's the crisis? Medical malpractice claims are down. Premiums are down. Meanwhile, insurers are raking in money and belittling the fact that hundreds of thousands of patients are killed or injured due to medical negligence each year. Many states have already afforded health care providers extensive legal protections for reckless or unsafe medical care.

"Proposals in any national health care bill that will take even more money out of the hands of injured patients and into the pockets of insurers are utterly indefensible." #

Full post as published by InjuryBoard on July 22, 2009 (boomark / email).