Medical Malpractice News

Caps Don't Work

The insurance industry controls our health care system. It controls patient access to treatment, quality of care, and how much doctors are reimbursed. Reducing the amount the insurance industry should pay when a patient is harmed by medical negligence would further enrich the insurance industry and harm victims who have suffered egregious injuries.

Until we reform the insurance industry—by reducing the power the insurance industry has over our health care system and limiting the amount it can charge doctors for insurance coverage—we won't help doctors or patients.

Caps Do Not Lower Rates

• States with caps on damages have average insurance premiums that are 9.8% higher than insurance premiums in states without caps on damages. (Medical Liability Monitor, October, 2004)

• In the five states that recently passed new medical malpractice caps, premiums rose at nearly double the rate as states that did not pass a damage cap. Those states are: MS, NV, OH, OK and TX. (Medical Liability Monitor, October, 2004)

California's Caps Law Caused Rates to Rise

• California's caps did not help doctors—insurance reform did.
  "California doctors' premiums increased by 450% in the first 13 years after the 1975 passage of MICRA and only began to decrease after voters enacted the insurance reform initiative known as Proposition 103." (Foundation for Taxpayer and Consumer Rights, "How Insurance Reform Lowered Doctor's Medical Malpractice Rates In California...And How Malpractice Caps Failed," March 2003, http://www.consumerwatchdog.org/healthcare/rp/rp003103.pdf)

• "While MICRA was the legislature's attempt at remedying the medical malpractice crisis in California in 1975, it did not substantially reduce the relative risk of medical malpractice insurance in California." (James Robertson, Assistant Vice President and Associate Actuary, SCIPIE Indemnity Company (California's second largest medical malpractice insurer), in written testimony responding to a question from an administrative law judge who is overseeing a case in which SCIPIE has requested a 15.6 % rate hike. April 30, 2003)

The Insurance Industry Admits Caps Do Not Lower Premiums

• "'We have not promised price reductions with tort reform,' said Dennis Kelly, an American Insurance Association spokesman." (Chicago Tribune, 1/3/05)

• "[M]any tort reform advocates do not contend that restricting litigation will lower insurance rates, and 'I've never said that in 30 years.'" (Victor Schwartz, General Counsel, American Tort Reform Association, Business Insurance, July 19, 1999)

• "Insurers never promised that tort reform would achieve specific premium savings . . ." (March 13, 2002 press release by the American Insurance Association)

• "Tort reform" advocates have long rejected the notion that enactment of caps on damages would lower insurance rates
  See: http://centerjd.org/air/pr/Quotes.pdf

• "We wouldn't tell you or anyone that the reason to pass tort reform would be to reduce insurance rates." (Sherman Joyce, President of the American Tort Reform Association, as quoted in "Study Finds No Link Between Tort Reforms and Insurance Rates," Liability Week, July 19, 1999)

Caps Are Discriminatory

• Caps on non-economic damages disproportionately affect women, children, the elderly, the disabled, and others who may not have substantial economic loss (i.e., lost wages or salary) but whose quality of life has been substantially, even permanently diminished. Non-economic damages compensate patients for very real injuries-such as the loss of a limb or sight, the loss of mobility, the loss of fertility, excruciating pain and permanent and severe disfigurement. They also compensate for the loss of a child or a spouse. Also known as quality-of-life damages, this compensation covers the most severely injured patients, such as people who are paralyzed and can't use the bathroom without assistance or a child who is brain damaged and will never have a chance to attend school, get married and work.

To fix the problem:

• Take away the insurance companies' anti-trust exemption to keep them from colluding and price-fixing
• Require prior rate approval; and
• Make insurance companies demonstrate the need for a rate increase in a public hearing.

The answer is insurance reform.

Updated January 2005