King Rat (gkr) wrote,
King Rat

Medical Malpractice Insurance: Crisis?

So tort reform is big in the news in washington state again. According to Republicans doctors are being forced out of business because of the high cost of insurance, and exhorbitant jury awards cause the high premiums. But the data published by the state insurance commissioner shows otherwise.

In 2003, the last year for which data is available, medical malpractice brought in $172,000,000 in premiums. Sounds like a lot, right? Look at how much was paid out in claims: $117,000,000. Meaning that insurance companies are bringing in about a 32% profit margin on medical malpractice. It's not the malpractice awards that are driving the premiums people. In fact, according to Insurance Commissioner Mike Kreidler, malpractice premiums are going down, adjusted for inflation.

But Kreidler’s research shows that the average cost of medical malpractice rates, adjusted for inflation, has actually declined for many specialties compared with 1985.

For example, the average malpractice insurance payment for obstetricians was $76,150 twenty years ago, adjusted for inflation.

The 2005 rate proposed by Physicians Insurance, which insures 70 percent of nonself-insured doctors in the state, is $66,419.

For neurosurgery, another high-risk specialty, the average rate went from $88,765 to $86,225.

Kreidler said Physicians Insurance, which is owned by doctors, has proposed a 7.7 percent cut in medical malpractice rates.

“We’re reviewing it to see whether that’s enough, in the face of record profits,” Kreidler said.

There's an initiative to the legislature that will likely come before voters in the fall. This initiative would limit your ability to recover damages if a doctor screws up and leaves a screw inside during surgery. Don't be fooled. The insurance industry claims it's merely a blip in an ever increasing spiral. And if one looks at 2002, it might appear that way. Medical malpractice lost insurance companies a bit that year (they paid out about as much in damages as they took in). But in 2001 they had an 18% profit margin on the coverage. And over time, compared to 1985, the coverage is cheaper. Medicine is more complicated than 1985, which makes messing up more likely. Yet it's still cheaper. Either doctors are messing up less, or the injuries caused aren't causing as much in damages. This does not indicate that medical malpractice awards are rising out of control.

Don't be fooled.


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