It's not like we haven't known this caps on medical malpractice damages don't work for quite a while now. Not only do they fail to produce better medical results, they don't even produce lower malpractice insurance rates as they should.
Tort Reform and Its Impact on Medical Malpractice Insurance
Will Non-Economic Damage Caps Help?
March 2003The medical malpractice insurance industry is definitely in crisis, with many insurers refusing to cover hospitals and physicians. This scarcity along with skyrocketing costs are thought to be the result of numerous professional liability claims and lawsuits. Tort reform proponants list non-economic damage caps as the number one medical liability reform measure. However, non-economic damage limitations have their greatest impact on lowering hospital, and other institutions’, rates rather than those rates assessed to physicians.
Breaking news — October 27, 2004
Nation's Largest Medical Malpractice Insurer Declares Caps on Damages Don't Work, Raises Docs' Premiums;
Douglas Heller, (310) 392-0522 ext. 309
Smoking Gun Document Exposes Insurance Industry Lies
Santa Monica, CA -- The nation's largest medical malpractice insurer, GE Medical Protective, has admitted that medical malpractice caps on damage awards and other limitations on recoveries for injured patients will not lower physicians' premiums.
The insurer's revelation was made to the Texas Department of Insurance (TDI) in a regulatory filing obtained by FTCR. The revelation was contained in a document submitted by GE Medical Protective to explain why the insurer planned to raise physicians' premiums 19% a mere six months after Texas enacted caps on medical malpractice awards. In 2003, Texas lawmakers passed a $250,000 cap on non-economic damage compensation to victims of medical malpractice caps after Medical Protective and other insurers lobbied for the change.
According to the Medical Protective filing: "Non-economic damages are a small percentage of total losses paid. Capping non-economic damages will show loss savings of 1.0%." The company also notes that a provision in the Texas law allowing for periodic payments of awards would provide a savings of only 1.1%. The insurer did not even provide its doctors that relief and eventually imposed a rate hike on its physician policyholders.
"When the largest malpractice insurer in the nation tells a regulator that caps on damages don't work, every legislator, regulator and voter in the nation should listen," said FTCR's Executive Director Douglas Heller. "Medical Protective's rate increase and this smoking gun document prove that the insurance industry cannot be trusted on the issue of malpractice caps."
Medical Protective and other supporters of medical malpractice caps have repeatedly argued that damage awards are the primary reason for skyrocketing medical malpractice premiums. For example, in a March 2004 report. GE Medical Protective stated that capping non-economic damages is a "critical element [of reform] because in recent years we have seen non-economic damages spiraling out of control." [from Health Care Crisis: Causes and Solutions]
The Texas rate increase and the actuarial data submitted by the company contradicting the oft-stated importance of caps should lead policymakers to look to insurance regulation, rather than malpractice caps, as a solution to high premiums, according to FTCR.
"While medical malpractice caps limit the rights of injured patients, they do not lower doctors' premiums. If lawmakers and physicians want to reduce costs, they should start fighting to reform insurance companies rather than restrict patients' rights," said Heller.
The nonpartisan FTCR pointed to the success of regulatory intervention in California in fighting planned medical malpractice rate hikes. Since 2003, the California Department of Insurance and FTCR have stopped $50 million in rate hikes proposed by the largest medical malpractice insurers, using Proposition 103, the state's insurance regulation law enacted by voters in 1988.
As in Texas, California has a $250,000 cap on damages (California's limits, however, have been in place since 1975). And, as in Texas, large California insurers have proposed major rate hikes on doctors in recent years despite the caps.
GE Medical Protective sought a 29.2% rate hike in California
However, because of California's system of insurance regulation, FTCR was able to challenge the hike resulting in the company reducing its rate proposed increase by 60%. Unlike California's system, the Texas Insurance Commissioner, who disputed the need for Medical Protective's increase in that state, does not have the regulatory authority to block inappropriate insurance increases.
"In California, Texas and throughout the country, malpractice insurers like Medical Protective continue to push for higher premiums for doctors, regardless of whether or not the state has caps on damages. Insurance regulation, not caps, has been the only successful weapon in the battle against skyrocketing premiums," said Heller.
Not the First Industry Admission That Caps Fail
In 1986, after insurers and doctors lobbied for, and Florida lawmakers enacted, a cap on non-economic damages for medical malpractice claims, insurers Aetna and St. Paul increased doctors' premiums. The companies argued that, despite earlier promises, malpractice caps do not actually lead to savings for doctors, much in the manner of Medical Protective in its recent Texas filing.
According to a St. Paul Insurance company study provided to the Florida Department of Insurance at the time:
"The conclusion of the study is that the noneconomic cap of $450,000, joint and several liability on the noneconomic damages, and mandatory structured settlements on losses above $250,000 will produce little or no savings to the tort system as it pertains to medical malpractice."
"Time after time insurers present caps as the panacea for high insurance rates only to argue that caps actually have a negligible impact when it comes time to send doctors the bill," concluded Heller.
Delicious
Digg
Reddit
Newsvine
Furl
Google
Yahoo
The Change We Don't Need
One of the small things I find interesting about this position of the Obama Administration (yes, I mean the President and his staff, not just his staff) is that placing a cap on medical malpractice suits runs contrary to the microeconomic theories they continually invoke to justify other parts of their agenda.
The reason insurance is high
The reason insurance is high is because, like expensive dental work, it's practically guaranteed (I've heard the average (read mean) doctor gets a suit every 5 years or so). People sue over tragic outcomes that are often unavoidable and for insurance companies, even if (especially if) they win all their suits the main expense is legal fees for the ones they win. If caps don't reduce insurance costs, then it's more proof that most suits are unsuccessful.
I don't think 'tort reform' goes out the window with bad/unsuccessful approaches. And politically, this is a huge issue for doctors--and getting them on board should be a goal--not just for passing a bill but for support of the national infrastructure into the future.
Stripping Patients Of Their Right To Sue Doctors
I am having a hard time deciphering your meaning here. Are you suggesting that malpractice insurance rates are high because every doctor is sued at least once every five years? If every doctor is not sued at least once every five years, then who exactly are the doctors who are being sued and why? You assert that people sue over tragic outcomes that are often unavoidable? What data do you have to support this claim and what percentage of the malpractice suits that are filed against medical practitioners do you believe fall into this category?
Please explain why limiting, through legislation, the amount a tort victim can collect is justified in terms of persuading doctors to support health reform? Malpractice suits occur because patients or their families believe that the attending physicians have been derelict in their duties. Whether they have or not seems like a legitimate issue to be sorted out in court or through voluntary arbitration. Placing a cap on the amount that the malpractice victim can collect is bad public policy, especially when its aim is not really related to reducing medical costs, as you admit, at all.
Are you suggesting that
Yes, and just as importantly, it's an issue for doctors. I've heard it anecdotally, and don't have a good source. Googling yields this excerpt, which seems to be anti-tort reform but mentions that in specific states/years claims have been 1 claim/doctor/3years (in NY in 1970s) and 1 claim/doctor/5 years in another report. Clearly this is in the ballpark.
I have no idea, but if it's at all close the number of suits that succeed, I've read ~80%.
I completely agree, and alluded to my agreement when I said "I don't think 'tort reform' goes out the window with bad/unsuccessful approaches."
But tort reform encompasses many policy options. I really haven't looked into it much, so I'd be happy to discover that tort reform is unnecessary. Some possibilities that I'd prefer by instinct (without looking up similar studies from above) would be:
1. general frivolous lawsuit policies--where the loser pays some portion of the legal fees of the other side.
2. many doctors seem interested in the idea of 'medical courts' where doctors compose some percentage of the judge/jury.
My general point is that doctors and the medical field are a constituency and we want their political support--especially in policy which affects their domain. If we gain that by adding good policies which affect doctors' positive experiences with the tort system, then let's do it.
Reforming The Legal System To Help Doctors
This is almost too rich for ridicule but I can't resist. Why don't we have patient courts, too, where patients comprise some percentage of the judges and juries?
I've always felt that the
I've always felt that the entire insurance industry (be it auto, home, or medical) is this nations single most largest ripoff industry. People pay but have very little return; insurance companies spend the bulk of their time and energy trying NOT to pay their own clients, even when they deserve it. Supporters of tort reform have agendas that have nothing to do with limiting frivolous lawsuits but with limiting people's ability to sue at all! To me (and I'm speaking from professional experience) frivolous lawsuits are small compared to lawsuits brung with true merit (I'd say about 10 to 1). But seldom are the merited cases publicized, partly due to gag orders placed on winning clients. Bottom line, it is the insurance industry that needs reform, not tort law.
Away With All Pests...
Yes, of course, we should solicit their input, advice and support, if needed, on matters that affect their ability to practice medicine. They are relevant players in the process, which, by the way, far too many of them are inclined to overlook when it comes to soliciting the input of those of us who are not doctors. That said, however, I don't think doctors are owed by profession or deference by non-doctors positive experiences with the tort system. Their rights as litigants and defendants should be protected by all means but they are no more entitled to special consideration or treatment than any other group of potential defendants.
I might be completely willing to change my views on these matters if doctors were willing, say, to relinquish the monopoly control they currently exercise over who is and who is not admitted to medical school and why. Our current process of recruiting, schooling and training physicians which can cost hundreds of thousands of dollars per individual doctor is a factor both in the cost of medical care and the fact that there is a paucity of physicians in many rural and urban areas. This is an area in greater need of reform than the tort system.
Why don't we have patient
I think the critique is that's basically what we have, even though the judgement is supposed to be based on the current standard of care.
Not The Same At All
Not quite. What we currently have are juries that are composed of people who probably have been ill enough at some point in their lives to be treated by a physician. This is not the same as juries and judges intentionally comprised of members of the medical profession. Not the same at all.