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News and Commentary on Workplace Health & Safety, Labor and Politics

Wednesday, February 23, 2005


More Administration Lies About Medical Malpractice "Reform"

A story in the New York Times exposes Bush's lies about medical malpractice "reform," one part of the administration's drive to weaken people's ability to sue companies (or physicians) for negligence and products (such as asbestos) that kill; or as Bush says, "costly and frivolous lawsuits."

The myth, according to the President and the business lobbyists is that the high costs of malpractice insurance "don't start in an examining room or an operating room," the president declared. "They start in a courtroom."

The truth, according to the Times is that there has not been a rise in medical malpractice awards causing malpractice insurance rates to skyrocket. Rising insurance rates are a product of poor investments by the insurance companies that they are trying to recoup by raising their rates.
Data compiled by both the federal government and by insurance organizations show costs for the insurance companies climbing steadily over the last decade at an average annual rate of about 3 percent, after adjusting for inflation. Over most of that period, premiums for doctors rose modestly and sometimes even dropped as the insurance companies battled for market share in a scramble to collect more money to invest in strong bond and stock markets. But when the markets turned sour and the reserves of insurers shriveled, companies began to double and triple the costs for doctors.

***

The recent jump in premiums shows little correlation to the rise in claims. According to the National Practitioner Data Bank of the Health and Human Services Department, the total paid out by insurance companies for claims against doctors and other medical professionals rose 3.1 percent annually, on average, between 1993 and 2003 and then declined last year.
So what works and what doesn't? In California, they tried limiting awards -- and controlling premium increases:
Many insurers regard the $250,000 limit in California as a model for Mr. Bush. They see it as largely responsible for California's shift from being one of the most expensive places for medical malpractice insurance to one of the least expensive. Consumer advocates, however, say the main reason costs for doctors have fallen in California has been a 1988 law that prohibits insurers from raising rates more than 15 percent a year without a public hearing.

And some 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."

Related Articles

Run! The Sky Is Falling: Republican Tort "Reform" , January 11, 2005
Malpractice Misconduct, June 22, 2004
Medical Malpractice Solution: Kill the Lawyers (and their families), June 10, 2004
Texas Passes 'Polluters and Predators Protection Act', September 17, 2003

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