10 July 2003

Medical Malpractice Bill Dies in Senate

Senate Democrats killed a draconian medical malpractice bill that would have limited damage awards to $250,000. Republicans, in support of the legislation, argued that this proposal was needed to address the health care crisis of rising premiums and "driving doctors out of business". Republicans, in pig like fashion, ever so beholden to thier insurance industry suitors, eagerly distort the truth and promote pure spin in this debate.

An oft repeated bromide is the notion that malpractice lawyers are the primary cause for the high price of health insurance. A number of recent news articles, including an extensive USA Today study, have debunked this assertion.

But a six-week study by USA TODAY finds that while some doctors in particularly vulnerable specialties — obstetrics, neurosurgery and some high-risk surgical fields — face severe problems, most physicians are minimally affected. Premiums are rising rapidly, but no more than other health care costs. They represent only a small slice of doctors' expenses. Even for the hardest-hit specialists, the most severe problems are concentrated in a handful of states.

How much of a doctor's revenue goes to malpractice insurance? A March 2002 government report by MedPAC, a congressional advisory commission, says doctors, on average, were expected to spend 3.2% of their revenue on malpractice insurance last year. That compares with 12.4% for staff salaries, 11.6% for office expenses and 1.9% for medical equipment. Calculations based on two surveys published by Medical Economics magazine — widely read by physicians — last year show that OB-GYNs paid the most for malpractice insurance, as a percentage of their revenue, 6.7%, and cardiologists paid the least, 1.5%.

Some other factual tidbits:

  • Less than 2% of malpractice claims result in a winning verdict at trial, according to insurance industry estimates.
  • In some states, medical organizations and regulators have failed to weed out bad doctors. That has caused malpractice rates to go up for all.

As far as damage caps go, a recent Time article shows doctor's malpractice insurance rates are higher in states with damage caps.

According to Time ... published ... by Weiss Ratings, an independent insurance-rating agency in Palm Beach Gardens, Florida, found that between 1991 and 2002, states with caps on noneconomic damage awards saw median doctors malpractice insurance premiums rise 48% -- a greater increase than in states without caps. In states without caps, median premiums increased only 36%. Moreover, according to Weiss, “median 2002 premiums were about the same” whether or not a state capped damage awards.

Another report from Public Citizen found that nationwide, malpractice damages fell 6.9% from last year.

Nationwide, damages fell 6.9 percent last year, according to the group's analysis of records from the government-run National Practitioner Data Bank, which compiles doctors' malpractice payments and disciplinary actions.

Pure common sense dictates that insurance rates are not dependent on the small frequency of liability suits, and that insurance premium costs are due more to compensating for investment income decline and for the inability of medical organizations and regulators to weed out bad doctors. In fact, insurance companies and their lobbyists admit point blank that damage caps will not lower insurance premiums.

More important, why should government take away the power of a jury to decide what is just?


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