The medical malpractice insurance business is either back under control and meeting the needs of the market without the benefit of major and widespread tort reform, or is in crisis, near death, and likely to expire without major tort reform.
Where you sit determines what you see.
From consumer watchdog group Americans for Insurance Reform comes the following excerpt from their press release:
“Americans for Insurance Reform (AIR) released a new study today confirming the wholesale decline of medical malpractice insurance rates nationwide. The AIR study also shows that this phenomenon is occurring whether or not states enacted restrictions on patients’ legal rights, such as “caps” on compensation. The medical malpractice insurance “crisis” is over, according to the study.
AIR’s study is based on the most recent Council of Insurance Agents and Brokers survey of market conditions, showing that the average rate hike for doctors over the past six months has been 0 percent. This is following similar results for the last quarter of 2004, which saw rates rising only 3 percent at the end of that year. By comparison, rates jumped 63 percent during the same quarter of 2002. ”
In contrast, the Council of Insurance Agents and Brokers released their own interpretation of the numbers, noting:
“‘ to interpret that data to mean that the ‘crisis’ is over is a gross misrepresentation of the situation,” Crerar said. “First of all, having rates stabilize for one or two quarters doesn’t mean those rates have gone down. It only means that they have not gone up any farther. It is like saying that just because gasoline costs $2.50 a gallon today, down from $3 a gallon last year, we don’t have an energy crisis, and gas is cheap.”
CIAB also finds fault with AIR’s math, and reading CIAB’s interpretation it does appear the Americans for Insurance Reform could do with a little more practice with the calculator.
So, what’s the real deal?
Well, the malpractice “crisis” is partially related to insurance cycles (we’re in a transition from a hard market to a confused one right now), and as I’ve noted before, has a relatively small impact on overall health care costs. While the med mal debate is interesting, it is a sideshow – med mal is not a major force in US health care.
That said, the interesting point is that the drop in rates is occuring in states that implemented tort reform and those that did not. Makes one wonder what influence tort reform has on costs…
Mar
4
It is very easy to blame the malpractice attorneys on this, and I am certainly not their favorite person. But the fact is that malpractice awards have remained steady — at 0.5% of the total health care costs — for the last five years. As HC costs have risen at double-digit rates, malpractice costs have too but still remained at 0.5%.
It is equally easy to blame the doctors for over-ordering tests to CYA, and if they were not simultaneously making a very handsome profit on those tests, I’d probably believe the charade. But I’ve learned to know better.
I think patients who have been egregiously harmed by incompetent doctors and hospital personnel, especially when faced with a resulting lifetime in the wheelchair, deserve fair compensation (I could even stomach triple the average US salary for life). But *punitive* awards should go straight to the funding of the health care system and not into the hands of greedy patients or attorneys.