Major Malpractice Insurance Study Finds Liability Should Not be More Limited

A major study released on July 23 by Americans for Insurance Reform finds that premiums and claims for doctors have dropped off considerably in the last few years, while business is booming for the medical malpractice insurance industry. The study concluded that placing further limits on the liability of negligent doctors and unsafe hospitals would be unjustifiable, and would have almost no impact in lowering health costs.

Cutting Costs or Harming Patients?

The national health care crisis has prompted questions on how to make health care affordable for everyone. Some of the discussions have revolved around limiting patients’ ability to bring claims against incompetent doctors, as a means to cut costs. State medical and insurance lobbies have long argued that establishing legal roadblocks in the way of injured patients could reduce malpractice insurance rates and keep doctors practicing. The AIR, a coalition of almost 100 public interest and consumer groups produced this review of medical practice premiums, claims, profits and medical malpractice tort law limits in order to determine whether the proper course of action.

The AIR found that medical malpractice premiums are the lowest they have been in over thirty years. Claims have fallen drastically, down 45 percent since 2000. J. Robert Hunter, the Director of Insurance for the Consumer Federation of America (CFA) described the findings: “The periodic premium spikes that we see in the data are not related to claims but to the economic cycle of insurers and to drops in investment income.”

Hunter also reported that since prices have not declined as much as claims have, medical malpractice insurer profits have climbed higher than the rest of the property casualty industry. The group’s research emphasized that medical malpractice claims and premiums have almost no cost on health care, making it impractical to limit the ability to file claims.

Examples of Exploitation

The AIR cited a 2003 malpractice law in Texas that capped pain-and-suffering awards at two hundred and fifty thousand dollars as evidence that limits would be exploited. The severe tort reform supposedly would attract doctors back to the rural areas they abandoned due to cost of insurance. This never happened, while lawsuits were reduced to nearly zero. According to the AIR, “Texas patients lost significant legal rights and many unsafe health care providers are now unaccountable.”

The study added that medical malpractice premiums are only about 0.5% of overall health costs, with medical malpractice claims amounting to 0.2% of health care costs. “If Congress completely eliminated every single medical malpractice lawsuit,” the AIR states, “including all legitimate cases, as part of health care reform, overall health costs would hardly change, but the costs of medical error and hospital-induced injury would remain and someone else would have to pay.”

Money might change hands, the AIR concludes, but only from injured patients and into the pockets of insurers.

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