Scranton Times Tribune

Study: Docs' premiums soar

By Mary Jo Feldstein

06/03/2003

A controversial report released Monday by a financial rating company found Pennsylvania doctors paid an average of 523 percent more for malpractice insurance in 2002 than they did in 1991, despite malpractice payouts increasing only 50 percent during the same time period.

Anomalies in how Pennsylvania doctors buy insurance and how their payouts are reported to a national database could account for the "bizarre" numbers, said state Deputy Insurance Commissioner Randy Rahrbaugh. Pennsylvania doctors must pay premiums to the state's catastrophic fund and the same fund also pays out a portion of large claims -- factors that may have somewhat skewed the statistics.

Lack of information nationwide forced researchers to take some "mathematical license" when figuring out average premiums, said Stephanie Eakins, a lead financial analyst at Florida-based Weiss Ratings Inc. and an author of the 19-page report. She said numbers from all states went through the same formulas to make the data as uniform and accurate as possible.

"I don't know why Pennsylvania is so out of range," Ms. Eakins said. "It's really just not a good place to be practicing these days."

Weiss -- which is a "completely independent" research group, according to Ms. Eakins -- found states with limits on malpractice damages had slightly higher than average premiums and steeper premium increases than states without caps overall.

"The cap doesn't bring the premium down, I guess that's really the conclusion," Ms. Eakins said.

Despite the fuzzy math, Mr. Rahrbaugh said he agrees with the report's conclusion.

"There is little evidence to show that caps solve the medical malpractice crisis," Mr. Rahrbaugh said.

Physicians have repeatedly pointed to caps as an essential element of any medical malpractice reforms. State and national lawmakers are considering enacting caps and President Bush championed them when he visited Scranton in January. A constitutional amendment would be required for Pennsylvania lawmakers to enact caps at the state level.

Weiss found that while caps slowed the growth of claims, insurers did not transfer those savings to doctors.

Scranton attorney David Fallk said the report is more evidence that the insurance industry is the culprit.

"The doctors are still losing. Patients' rights are still losing and the insurance industry is the winner," Mr. Fallk said.

Reports on the divisive issue of medical malpractice are often criticized for being paid for by an interest group.

Weiss typically releases reports on the financial stability of insurance companies and other businesses.

"We are completely independent," Ms. Eakins said. "We have nothing to gain from this either way."

Medical inflation, losses on investment income, poor underwriting and a lack of reserves were among the elements Weiss saw "as more important factors driving the rise in med mal premiums than caps or med mal payouts."

Again, Mr. Rahrbaugh would agree.

"There is not the silver bullet that a lot of people think there is to solve this problem," he said. "The problem starts with medical errors."

Stephen Foreman, Ph.D., who directs the Pennsylvania Medical Society's Health Services Research Institute, also questioned the report's Pennsylvania findings.

Dr. Foreman said his research shows increases in premiums typically correspond to increases in payouts. He said recently premiums have increased ahead of payouts for many reasons, including investment losses and the need for insurance companies to expand their reserves.