Insurance Reform

The insurance industry is quick to argue that medical malpractice litigation is causing doctors’ premiums to skyrocket, leading to a potential healthcare crisis as doctors retire early and abandon specialized fields. They claim that they’re forced to increase rates due to our litigious society, and that we’ll ultimately pay the price in higher reimbursements rates and a dearth of care.

However, what insurance companies won’t tell you is that medical malpractice has little nothing to do with rising healthcare costs – in fact, as little as 2 percent.

A 2009 study found that in the past 30 years, medical malpractice premiums are currently at their lowest. The fall in medical malpractice premiums is attributable to a drop in claims, which have been reduced 45 percent since 2000. Though both have decreased, premium rates haven’t kept pace with claim reductions, resulting in outrageous insurance profits. Claims may come down, but insurance companies aren’t willing to cut their profits.

Insurance companies are also quick to defend tort reform, arguing that damage caps and other reforms will reduce payouts, enabling them to reduce premiums. However, this claim has been proven false. Premiums have stayed almost the same for states with damage caps as those without.

Take Pennsylvania as an example. After enacting two pieces of tort reform – certificate of merit and venue reform – Pennsylvania has seen a six-year decline in the number of medical malpractice filings. According to insurance industry logic, a filing decline should bring about a corresponding decline in insurance rates. But Pennsylvania’s doctors are expecting an increase in rates.

As a Pennsylvania Medical Society spokesperson said:

“We expect [the insurance] market to begin tightening again and rates to increase. These things happen in cycles.”

Overall, research has shown that medical malpractice claims and insurance premiums have almost no impact on the cost of health care. Medical malpractice premiums are less than one-half of 1 percent of overall healthcare costs, and medical malpractice claims are only one-fifth of that 1 percent.

Even if every medical malpractice lawsuit – including legitimate cases – were eliminated, healthcare costs wouldn’t show a significant change. Meanwhile, patient safety would see a dramatic change. Without liability, the standard of care would be abandoned, increasing errors and pushing those costs onto government assistance programs instead of negligent doctors and the insurance industry.

We shouldn’t sacrifice patient safety to benefit insurance companies. Instead of tort reform, we need substantial insurance reform to reel in skyrocketing healthcare costs and cure our healthcare crisis.