A thoroughly excellent synopsis of the med mal insurance industry’s good fortune reveals that the number of suits filed is a small fraction of those that could be filed, and likely won.
According to Jason Shafrin;
“Less than 3% of people who receive negligent physician care actually sue.”
So, could politicians, physicians, and misguided health care economists please stop whining about med mal? It could be a whole lot worse.

Many years ago I was stopped for speeding in Montana – specifically doing 90 in a 55 mph zone. The fine was $5 and was paid on the spot. The officer wished me a nice day, and off I went at 90+. It looks like Massachusetts may have learned from the Big Sky state, at least when it comes to setting penalties for politically unpopular laws.
Yes, the new Massachusetts universal coverage law requires most employers provide employees with health coverage, but the penalty of $295 per employee for non-compliance is somewhat of a joke. With health insurance costs per employee in the $5000 plus range, the penalty amounts to a 6% fine for noncompliance.
Not exactly a strong message…
Meanwhile, the state’s law may well be challenged by corporations under ERISA…a nod to Paul Secunda for his interpretation of the situation and to John Rodat of SignalHealth for the heads up.

Pretty much everyone would agree that when it comes to information about physician practice patterns, outcomes, and costs, the more the public knows, the better. And the staunchest supporters of consumerism are the most ardent advocates of full disclosure of publishing health care provider data. Why just this week Pres. Bush was in Connecticut stumping for his various solutions to the nation’s health care crisis, proclaiming the benefits of information in driving down costs and improving outcomes.
No big news here.
Except that Medicare provider data, the nation’s largest database of provider-specific information, encompassing over a billion claims per year, with information on practice patterns on the vast majority of physicians in the US, and under the direct control of the Federal government (and therefore by Mr. Bush) has not been released to the public. Or anyone else, for that matter.
What’s going on? Well, the Feds claim that the data is private, is covered under a 1979 law prohibiting disclosure of individuals’ data, and therefore cannot be released. This is somewhat confusing, as most physicians practice in professional corporations (that’s the significance of the “P.C.” you see after the name of the doc or medical group) and therefore are not covered by the law.
I’ll admit to a bit of cognitive dissonance here. Are these are the same Feds that can unilaterally release confidential information about national security issues; use Executive Findings to claim exemption from Acts of Congress; the Feds that are of the same party that controls both Houses of Congress and therefore might have some say in what new legislation is passed; the Feds in control of the Attorney General’s office with all its resources, which has demonstrated its willingness to prepare legal documents authorizing all manner of actions?
Given the aggressive position of the Administration on other issues, its willingness to take steps that are bold and controversial on other matters, I’m really surprised that they have been so, well, wimpy on disclosure of Medicare data.
What does this mean for you?
Likely frustration, regardless of your opinion on consumerism in health care.

Sally Pipes is a think-tank leader out on the west coast who appears to be a “free-market-as-cure-for-healthcare’s-ills” advocate. Her latest effort appeared in USAToday earlier this week, wherein Ms Pipes reveals her belief that Massachusetts’ health plan legislation is a thinly-veiled attempt to force the state into a single-payor solution.
While the entire editorial is, well, interesting, one of the most bizarre statements in her editorial is this –
“Individual health insurance is not always a good deal in Massachusetts, thanks to state-imposed community rating regulations that require companies to charge the sick and healthy the same rates.”
Uh, that’s kind of the point of insurance – everyone pools their funds to pay for the claims of the few with high expenses. If you don’t do that, you have what is known as pay-as-you go. And that’s not insurance. But for some reason Ms. Pipes thinks that’s bad.
Wait, there’s more.
Ms. Pipes then says that the Mass plan will saddle the state with the “same health plan design (that is) threatening General Motors Corp.’s viability and bankrupted its suppliers.”
Oh jeez, that’s about eight errors in less than one sentence.
Health plan design is not the main problem at GM – lousy cars, poor union negotiation tactics, aging plants, high gas prices, and bad management are GM’s biggest problems. And health care. But GM’s health care plans are WAY different from the new plan in MA. And cost-shifting from the uninsured, an aging population, too many retirees, inadequate cost controls, and lack of effective disease management are the biggest problems with GM’s health care program.
Here’s the silver lining – Ms. Pipes went on to say “The legislation will not control the true costs of these plans.” That’s absolutely true, and she is right on point, and I agree.
It’s great to find common ground.

Bob Laszewski is one of the most insightful observers of health policy matters inside the Beltway, and his recent comments on Enzi’s proposed AHP legislation continue that record. Bob has noted that the bill now before Congress is a far cry from the original AHP legislation, and has potentially far-reaching consequences for the health insurance industry.
AHPs were health insurance plans set up by trade associations who used them to generate fat commissions. Back in the eighties and early nineties, trade association members signed up for these programs in large numbers. While they did not have much in the way of managed care or “cost containment”, many AHP type programs thrived even after the initial entry of managed care programs into the market, on the basis of their ability to select the best risks and price accordingly.
As HMOs and health plans became more sophisticated, the AHPs’ advantages in these areas declined significantly, and their cost management capabilities were overmatched by those of the managed care experts in HMOs and larger health plans. Faced with very tough competition, AHPs all but died out in the late nineties.
For those that can afford them, small employers’ helath insurance costs are significantly higher than their larger competitors’. This additional cost is in large part due to higher administrative expenses; fewer premium dollars go to pay health care costs because it costs more on a per-person basis to bill premiums, issue cards, set up computer systems, track elgibility, etc. This differential has led Sen. Enzi, at the behest of the Chamber of Commerce, NFIB and others, to try to come up with a way to make insurance “affordable” for the small employer.
Enter the Enzi bill, titled, with much editorial license the “Health Insurance Marketplace Modernization and Affordability Act”. A product of the “sausage-making” that is our legislative process, the bill seeks to eliminate most state mandates, thereby allowing both insurance companies and associations to offer stripped-down plans.
While that sounds great, the likely effect of the bill, if it is passed, will be to allow insurers to do a much more effective job of risk selection, thereby avoiding the less healthy (i.e. more costly) people. I’m not blaming the insurance companies; insurance is about avoiding avoidable risk.
What Enzi’s bill will not do is make health care more affordable for small businesses. It will certainly make insurance more affordable for some businesses – those with healthier employees and lower risks. The rest will be even worse off than they are today.
What does this mean for you?
More health policy by folks without any health policy expertise equals no solutions to our health care cost problems.

OK, congratulations to Massachusetts’ legislators and governor for creating the nation’s first potentially viable universal coverage program. While everyone is busy congratulating each other, (free registration required) I hate to be the one to harsh their mellow. But so I shall.
I’ve read numerous reports of the new program, but nowhere have I seen any reference to any aspect of the program that convinces me it will work over the long haul. Why not?
There don’t appear to be any cost-control mechanisms, price or fee or utilization or frequency controls, nor any constraints on supply.
Yes, the program should eliminate excessive costs in the system due to cost-shifting, as long as the fees paid by all payers are high enough to cover associated costs. And, with cost-shifting accounting for about $1000 of the average family’s annual health insurance premium, the savings should be significant.
But that’s it. I’m afraid Massachusetts’ noble efforts have built a giant new demand mechanism, one that will produce healthier people, a one-time drop in premiums due to elimination of cost shifting (fingers crossed on that one), and ever-higher costs for the state’s citizens.
If we are relying on private industry’s innovators to come up with a solution, one that will effectively hold down costs over the long term for the entire population, we may have a long wait. For there are few incentives and lots of risks for any insurer to develop bold new programs when all they have to do is out-market their competition to capture their slice of the Mass pie. And there certainly has been ample opportunity for private companies to develop and deliver new programs over the past two decades, programs that could successfully constrain costs. That just hasn’t happened.
I hope I’m wrong, I hope I’m wrong, I hope I’m wrong.
But if I’m not, naysayers will have another example of an “experiment” that did not work out, an example they can, and will, point to as an image of another failed attempt by government to solve a huge problem.
The reality is government did not do too much, but rather did not go far enough.

White House Domestic Policy Advisor Allan Hubbard has been making waves of late, speaking out on behalf of consumerism in health care, advocating bigger tax breaks for health savings accounts, and demanding hospitals disclose their pricing information so consumers can make better decisions.
I’ve been blogging on consumerism in health care, the lack of useful data on prices and outcomes, and the complexities of health care buying decisions for well over a year, so no need to review those issues.
Except, one of his statements manages to simultaneously be both blatantly jingoistic and completely misleading. Here’s the quote from Sunday’s NYTimes “”no consumer is better than the American consumer at driving prices down and quality up.”
I’m not sure if Hubbard’s statement is a tortured call for patriotism as the solution to health care’s ills, or if he actually believes this drivel. Doesn’t really matter.
Every other country has some variation of nationalized health care, with some entirely nationalized (Canada), others mostly public (Britian), and others with a strict national requirement for care delivered by private providers (Switzerland). Yes, there are lots of variations and permutations, but every other country uses government to set prices for health care, not consumers.
And by the way, Allan, if you knew anything about health care you would know that the single most significant factor causing US health care to be more than 50% more expensive than other developed countries is price. And somehow you think that each individual citizen will be better equipped to demand and obtain lower prices for drugs than, say, the VA?
If that’s your position, Alan, than why are small businesses pushing so hard for Enzi’s AHP bill to allow them to capture the purchasing power of big companies?
My guess is Hubbard is another of the “every complex problem has a simple solution” guys.
What does this mean for you?
More wasted time as the Administration refuses to engage in meaningful efforts to address the health care crisis.

Contrary to popular belief, most of the patients in emergency rooms have insurance, but are there because they can’t get in to see their regular physician or are waiting for an inpatient bed. A new study released today by the American College of Emergency Physicians (and reported in the LA Times) indicates that about 15% of patients in ERs were people without health insurance.
The statistics hold true across the board, even for high utilizers of ERs (those who visited 4 or more times per year).
The report refutes a common misconception that the uninsured make up a substantial percentage of ER admissions.
What does this mean for you?
The lesson I take from this is to always question your assumptions (to quote one of Ayn Rand’s heroes), and question your most basic assumptions about health care most aggressively.

Yesterday’s New York TImes includes an excellent primer on avian flu (A(H5N1)), one that executives at managed care firms would be well-advised to read and file away. For those without the time or inclination to do so, here’s a couple interesting take-aways.
To get your attention, the World Health Organization estimates that if the bird flu becomes contagious among humans, an infection rate of 25% is possible. Estimates are that this would lead to deaths totaling 400,000 in Europe and 200,000+ in the US.
1. To date, bird flu has infected about 200 humans and killed approximately 100 that we are aware of. This last qualifier is key; as most of the infections have occured in underdeveloped countries, reporting may well be suspect. However, for a disease that has been in existence for over ten years, the death toll has been very low indeed. This leads some experts to surmise that avian flu is not likely to “jump” to human-human transmissability – if it hasn’t in ten years, it likely never will.
2. The death rate may not be nearly as high as indicated above, as some infected people may have relatively mild cases for unknown reasons. Again, under-reporting would skew the numbers.
3. BUT. The disease also did not move out of southeast Asia for ten years, then exploded across the entire continent in the space of a few months. This somewhat refutes the argument that since the disease has yet to become transmissable between humans it won’t over the long term.
4. Flu pandemics are unpredictable, vary widely in their lethality and the profile of victims, can occur any time of year, and are very difficult to prevent via vaccine and treat via drugs, as the virus is highly adaptable.
Fitch Ratings has doen their usual excellent work preparing a review of the potential impact of bird flu on the insurance industry. While Fitch notes that most of the financial impact of a pandemic woudl hit life insurers and reinsurers, it also provides its perspective on the effect on other lines of insurance, notably health.
What does this mean for you?
Better to be aware and prepared for something that never happens than unprepared for a crisis.