| Medical
Malpractice Caps Fail to Prevent Premium Increases for Physicians
In
June, 2003, Weiss Ratings, Inc. published a study demonstrating
that caps on non-economic damages in medical malpractice cases
have failed to prevent sharp increases in medical malpractice
insurance premiums for physicians.
Weiss Ratings is the nation's leading independent provider
of ratings and analyses of financial services companies, mutual
funds, and stocks. Weiss issues safety ratings on more than
15,000 financial institutions, including HMO's, life and health
insurers, Blue Cross Blue Shield plans, property and casualty
insurers, banks and brokers.(www.weissratings.com)
The comprehensive study performed by Weiss reviewed the impact
that tort reform has had on medical malpractice premiums paid
by doctors in three high risk specialties: internal medicine,
general surgery, and OBGYN practice.
The Weiss Study demonstrated the following trends between
1991 and 2002:
Despite caps on damages, physicians' med mal premiums rapidly
increased.
The insurance companies enjoyed slowed increases in payout
levels.
In 32 states without caps on damages, medical malpractice
premiums actually rose more slowly than in the 19 states that
had implemented caps during the 12 year period. In those 19
cap states premiums jumped 48.2% (from $20, 414 in 1991 to
$30,246 in 2002). In the 32 non cap states, premiums only
rose by 35.9% ($22,118 in 1991 to $30,056).
Martin D. Weiss, chairman of Weiss Ratings concludes "The
escalating medical malpractice crisis will not be resolved
until the industry and regulators address the other, apparently
more powerful factors driving premiums higher." The Weiss
study identified six other factors driving the sharp increases
in medical malpractice premiums:
- Medical
Inflation Rate:Medical costs have risen 75% since 1991.
- The
insurance business cycle: The insurance industry suffered
a 12 year "soft" period through 1999, during which
marketing goals superceded prudent underwriting practices.
Moreover, decision makers relied too heavily on high investment
income to make up for losing operations. To catch up, insurers
have tightened underwriting standards and raised premiums.
- Financial
Safety- 34.4% of the nation's med mal insurers are vulnerable
to financial difficulties, compared to 23.9% of the property
and casualty as a whole. To restore this financial health
med mal insurers will remain under pressure to increase
rates.
- The
need to shore up reserves: Since 1997, med mal insurers
have consistently under-reserved in the amount of $4.6 billion.
The only way to shore up reserves is to increase premiums.
- Decline
in investment income: Investment income declined by 23 percent
in 2001 and another 2.5% in 2002. This is particularly critical
for med mal since the duration of claims payouts span several
years.
- Supply
and demand for coverage: the number of med mal carriers
increased through 1997 to 274, but fell to 247 in 2002.
Weiss recommends that legislators should put all proposals
for non-economic damage caps on hold until convincing evidence
can be produced to demonstrated the true benefit to doctors
in the form of reduced med mal premiums. He also states that
insurance companies should not be allowed to let marketing
divert or pervert prudent actuarial analysis and planning.
Finally, he recommends that the medical profession must assume
responsibility for policing itself.
The Cochran Firm - Dallas, L.L.P.
Turtle Creek Centre, Suite 1400
3811 Turtle Creek Boulevard
Dallas, Texas
75219
phone:
214.651.4260
| fax: 214.651.4261
Edward H. Moore is Board Certified, Personal Injury Trial Law. Unless otherwise noted, not certified by the Texas Board of Legal Specialization.
The statements and information provided on this web site are for the information of the recipient only. This site is not intended to provide legal advice and no attorney-client relationship should be deemed to arise from the receipt this page and its associated pages. |
Copyright © 2003 The Cochran Firm - Dallas, L.L.P.,
All Rights Reserved.
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