HealthLawProf Blog

Editor: Katharine Van Tassel
Case Western Reserve University School of Law

Tuesday, February 22, 2005

Med Mal Premiums: What's the Cause?

The New York Times today ran an article entitled, "Behind Those Medical Malpractice Rates," by Joseph Treaster and Joel Brinkley.  Their conclusions won't surprise anyone who has followed the literature on this subject over the past 20 years, though it does fly in the face of the publicity machines at various state medical and hospital associations, as well as the PR juggernaut launched and promoted by President Bush, who has been on the stump this past month in support of his damage-cap legislation.

Despite the rhetoric that med mal premiums are soaring because of the cupidity of the plaintiffs' bar and the stupidity of jurors, the authors paint a different picture:

[F]or all the worry over higher medical expenses, legal costs do not seem to be at the root of the recent increase in malpractice insurance premiums. Government and industry data show only a modest rise in malpractice claims over the last decade. And last year, the trend in payments for malpractice claims against doctors and other medical professionals turned sharply downward, falling 8.9 percent, to a nationwide total of $4.6 billion, according to data.

The authors conclude: "Lawsuits against doctors are just one of several factors that have driven up the cost of malpractice insurance, specialists say. Lately, the more important factors appear to be the declining investment earnings of insurance companies and the changing nature of competition in the industry.  The recent spike in premiums - which is now showing signs of steadying - says more about the insurance business than it does about the judicial system."

And do the doctors benefit from caps on damages?  Apparently not:

[S]ome researchers are skeptical that caps ultimately reduce costs for doctors. Mr. Weiss of Weiss Ratings and researchers at Dartmouth College, who separately studied data on premiums and payouts for medical mistakes in the 1990's and early 2000's, said they were unable to find a meaningful link between claims payments by insurers and the prices they charged doctors.

"We didn't see it," said Amitabh Chandra, an assistant professor of economics at Dartmouth. "Surprisingly, there appears to be a fairly weak relationship.

This is an article worth reading and saving, right along with the August 2004 testimony of GAO researchers ("Medical Malpractice Insurance: Multiple Factors Have Contributed to Premium Rate Increases") and the June 2003 report of the same title.  [tm]

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