MARCH 3, 2003
LEGAL AFFAIRS
By Lorraine Woellert
Commentary: A Second Opinion on
the Malpractice Plague |
|
Way back in 1975, doctors marched on California's
statehouse and staged a sit-in over soaring malpractice-insurance premiums.
Politicians responded with a landmark law that capped pain-and-suffering payouts
to victims at $250,000--a measure that was copied in more than 20
states.
Now, premiums are spiking again, doctors across the country are
walking off the job, and President George W. Bush is calling for legislation
that would impose a California-like cap on malpractice awards nationwide. With
Congress in Republican hands, the proposal is getting serious
consideration.
But do caps on awards really keep doctors' insurance
premiums down? Both sides in the debate--doctors and insurers fighting for caps,
and trial lawyers and patients fighting against them--are waging a
war-by-anecdote. But clear away the dubious studies, the exaggerated line
charts, the hysterical press releases, and look at the numbers, and the
statistical case for caps is flimsy. Here's what we found:
MYTH 1:
Premiums have risen more slowly in states with caps on pain-and-suffering
awards.
The White House, pro-tort-reform business groups, and insurance
companies all note that states with caps on awards had average premium hikes of
just 12% last year, while states without caps averaged a 44% premium jump. That
puts a crimp on doctors, who have watched premiums compound for many years even
as their incomes are squeezed by managed care. But the Administration's analysis
is incomplete, omitting data from nearly a dozen states without caps, such as
Vermont and Arizona, where premiums have stayed low. If those states had been
included, the gap would have narrowed. Taken as a whole, capped states raised
premiums an average of 12.7% last year; states without them saw premiums rise
20.4%, according to data provided by Chicago newsletter Medical Liability
Monitor.
And if you go back a few years, the difference between
states with caps and those without narrows more. In 2001, premiums went up 5.8%
in the cap states, compared with 9.6% in jurisdictions without them. The year
before, premiums actually rose more in states with caps (3.2%) than in states
without them (2.7%)--a pattern that also held true in 1999 (2.12% vs. 0.54%).
The bottom line: Caps might moderate premium hikes, but not to the extent that
tort reformers claim.
MYTH 2: Runaway jury awards are forcing
insurers to raise rates.
The size of damage claims paid out by physician
insurers has been more or less steady since 1991, according to the National
Practitioner Data Bank, a government service that tracks doctor errors and
malpractice claims. The mean payout was $135,941 in 2001, up 8.7% from $125,000
a year earlier. Over 10 years, malpractice payouts have grown an average of 6.2%
a year.
Guess what? That's almost exactly the rate of medical inflation:
an average of 6.7% between 1990 and 2001, according to the Journal of Health
Affairs. It's also worth noting that, nationwide, malpractice payouts by
physicians and their insurers were a mere $4.5 billion in 2001--less than 1% of
the country's overall health-care costs of $1.4 trillion. They have risen
slowly, if steadily, since 1996, when the total was $3.5 billion.
MYTH
3: The number of mega-awards is growing.
It's the jaw-dropping
award that spooks insurers. They claim malpractice payouts of $1 million and
higher are becoming all too frequent, up by 7.9% last year. But the number of
mega-claims remains small. Only 895 out of 16,676 payouts, or about 5%, in 2001
topped $1 million, up from 506 in 1996, according to government
data.
Meanwhile, some states are finding that a small percentage of
physicians accounts for the majority of big malpractice verdicts--which would
indicate that the problem is a few bad doctors, not greedy tort lawyers.
Officials in Nevada, which adopted a $350,000 cap last year, discovered that
only two doctors were to blame for $14 million of the $22 million in claims
awarded in one recent year. Both are still practicing.
MYTH 4:
Courts are clogged with an exploding number of claims.
Claims against
the industry as a whole have actually been flat since 1996 (chart). In Florida,
a state insurers say is in crisis, medical malpractice claims rose just 3.7%
from 1997 to 2000, according to the National Center for State Courts, a
Williamsburg (Va.) research group. A broader as yet unreleased study of 17
states will show that filings remain stable, with an increase of about 5% from
1997 to 2001.
No doubt there are frivolous lawsuits out there. But there
are also plenty of medical mistakes. A 1999 study by the federally funded
Institute of Medicine found that 44,000 people die from hospital errors each
year. And doctors, many of whom are covered by physician-owned mutual insurers,
traditionally have been loath to sanction colleagues by denying them insurance.
"We're getting more aggressive" at weeding out bad doctors, says Dr. Richard E.
Anderson, chairman of Doctors Co., a Napa (Calif.) insurer that covers 28,000
physicians in all 50 states. But Anderson and other insurers refuse to document
that claim by releasing their nonrenewal rates.
That makes it hard to
tell if the profession is changing its culture. On this and many other key
points, proponents of caps simply aren't coming up with the facts to make their
case. Instead, they're relying on scare stories--always a bad starting point for
making serious policy decisions.
Woellert reports on legal affairs from
Washington.
