No Evidence of a Malpractice Crisis

New study finds that despite huge rate increases from insurance companies there is no evidence of a medical malpractice crisis because of patients.

Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988-2002
Bernard Black, University of Texas Charles Silver, University of Texas
David Hyman, University of Illinois William Sage, Columbia University

No Evidence of Malpractice Crisis
The American Medical Association (AMA) has claimed a "litigation explosion" has caused a crisis in medical malpractice. Texas is one of the AMA's "crisis" states. The three biggest insurers in the state have increased rates by an average of 135% over the last five years (1999-2003). However, data from the Texas Department of Insurance shows that the number of claims, the value of claims, and the rate of claims per physician have all remained constant or declined over the last decade.

Litigation and Claims Stable
Researchers from the University of Texas, the University of Illinois and Columbia University analyzed 15 years of closed claims data from the Texas Department of Insurance. They found "remarkable stability" in medical malpractice litigation and concluded that the massive insurance premium increases were driven by insurance industry dynamics, not claims.

Claims, Payouts, Awards, Rate of Claims - Stable or Dropping

Specifically the study found:

• Adjusting for population growth, the number of large claims (over $25,000) remained constant between 1991 and 2002.
• When adjusting for the amount of health care spending or the number of doctors, the number of large claims dropped.
• The percentage of claims that were considered large also remained constant.
• The number of small claims dropped sharply.
• Payouts and jury awards per claim remained constant or dropped.
• The rate of claims per 100 Texas physicians dropped from 6.4 (1990-92) to 4.6 (2000-02).

Medical Malpractice Claims Only 0.6% of Health Care Spending
The study also found that medical malpractice was a tiny factor in health care costs. Total 2002 payouts were about 0.6% of total Texas health care spending. Medical malpractice claims made up only 10% of closed claims recorded by the Texas Department of Insurance.

Tort Limits Won't Prevent Insurance Crises
The researchers found little, if any, connection between insurance premiums and claims. Premiums have increased dramatically while claims have remained stable. Therefore, the researchers conclude, tort limits are "unlikely to prevent future insurance crises."

For complete study, visit http://www.utexas.edu/law/academics/centers/clcjm/project2.html

March 10, 2005