OCR Text |
Show Hingkley Journal of Politics 2005 The Causes of the Problem Are medical malpractice lawsuits and "runaway juries" award-lr*g excessive amounts for damages to blame for the high costs °f health care? Each side has numbers and statistics to support their claim. The many conflicting charts and graphs can easily lead to confusion. As one article reported, "The arguments pro an-d con are full of data-and honest differences of opinion about how to interpret them. Sorting out the truth is as frustrating as trying to scoop water with a pillowcase" (Collins ^004, A01). Utah is not the only state struggling to sort out the bounds of data. An article in Florida's Sun Sentinel stated: During the 13 hours of grilling, senators watched a gaggle of state officials, lobbyists, doctors, and insurance executives eat their previously quoted words - or wish they could. "We have been working on the issue for one year, but we got more information in two days when we were able to extract the truth under oath," observes Sen. Durrell Peaden Jr., a Republican. In other words, when witnesses who lie could face charges of perjury, the Judiciary Committee stopped getting "weasel words" and "doublespeak," says Sen. Tom Lee, another Republican. In sworn testimony, senators learned that doctors are not fleeing the state, applications to practice medicine here have increased, emergency rooms and trauma centers are not closing doors because of rising medical malpractice premiums, frivolous malpractice lawsuits are not a problem, and malpractice lawsuits [awards] have not skyrocketed (Goldstein 2003, A01). *s this the case in Utah? Is there really no crisis at all? Several statistics cannot be ignored. As a percent of their total income, doctors pay about the percentage of income for medial malpractice insurance as they have historically paid. For surgeons, that figure is about 6 percent, for Ob-Gyns about 8.5 Percent, and for all physicians in general it is about 5 percent (Newhall, 2004a). Over the last ten years malpractice payouts have grown an average of 6.2 percent between 1990 and 2001. That is almost exactly the rate of medical inflation; an average of 6.7 percent between 1990 and 2001 (Woellert 2003). And, if caps on damages are the answer as many claim, then why do 11 of the 25 identified medical malpractice crisis states already have caps in place? (Newhall 2004a). Currently 19 states including Utah have implemented caps °n non-compensatory economic damages. For example, the Most that a person can be awarded in non-economic damages ^ Utah is $400,000. The Weiss Report shows that while caps Ori awards did reduce the burden on insurers, most insurers continued to increase premiums at a rapid pace. This has been the case in Utah. Further, the report states that "there are other, far more important factors driving the rise in medical Malpractice premiums than caps or medical malpractice payouts" (Weiss 2003). According to Doug Mortensen, President of UTLA's °oard of Governors, there is also much evidence that, "so-called measures of 'tort reform' having the effect of restricting the rights of injured patients, have never brought about their Proponents' promised decrease in malpractice premiums" (2004). In testimony given before the Subcommittee on Health of the U.S. House Committee on Energy and Commerce regarding medical malpractice insurance rates, Travis Plunkett, Legislative Director of the Consumer Federation of America (CFA), stated that "Medical Malpractice rates are not rising in a vacuum. Commercial insurance rates are rising overall" (2002). Regarding the claims that medical malpractice premiums are the cause of the increase in the cost of health care, Clark Newhall, MD, JD, points out: Medical malpractice insurance premiums have nothing to do with increases in health care costs. It is true that the most cur-rent figures show that out of the 1.55 trillion dollars in health care costs only $8.8 billion are medical malpractice insurance premiums. That works out to 57 cents in malpractice premi-um for every 100 dollars in health care costs (2004b). The maximum potential savings that could be attained if all forms of legal redress for injured patients were eliminated would be under 60 cents on a $100 medical bill. This figure is not a significant enough percentage to justify the constant allegation that medical malpractice insurance costs are to blame for the high cost of health care. Furthermore, medical malpractice premiums as a percent of health care costs have been steadily declining over the past decade from .95 percent in 1988 to an estimated .57 percent in 2003 (A.M. Best and Company, 2001). So what is the cause of the drastic increase in medical malpractice premiums? The facts point to the natural "insurance cycle" of "hard" and "soft" markets. In his testimony, Travis Plunkett of the CFA gave many answers to the cause of increasing premiums. "Insurers are pointing fingers," Plunkett said, "when they should be looking in the mirror." Further he stated that it is the "hard insurance market and the insurance industry's own business practices that are largely to blame for the rate shock that physicians have experienced in recent months" (Plunkett 2002). Ironically, his opinion was even recognized by IHC. In an internal memo, IHC stated that "A number of observers believe that the cycle of insurance company investments, and their subsequent hard and soft markets, correlate better with the pattern of changes in malpractice premium rates than do jury awards-either numbers of awards or dollars" (McConkie 2004). Insurance is a cyclical business. According to the National Association of Insurance Commissioners: underwriting cycles may be caused by some or all of the following factors: 1. Adverse loss shocks.. .unusually large loss of shock may lead to supra-competitive prices. 2. Changes in interest rates... 3. Under pricing in soft markets (National Association of Insurance Commissioners [NAIC] 1991). Prior to September 11, 2001, the insurance industry had been in a soft market since the late 1980s. The usual six to ten year economic cycle had been expanded by the amazing stock market of the 1990s. No matter how much insurance compa- 45 |