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Four New Studies Show Lawsuits by Injured Patients Not the Cause of Insurance Rate Hikes

[Column 345, July 11, 2005] | Archived Columns

By Todd A. Smith*

There has been lots of talk recently about the issue of medical malpractice verdicts and settlements, in which a jury or judge provides compensation to victims injured by a negligent doctor, abusive nursing home, insurance company that refuses to pay for treatment, or a drug the pharmaceutical industry knew was dangerous.

Insurance and health care companies claim that these costs are rising, thereby increasing premiums rates and discouraging doctors from practicing medicine.

These corporate interests have been lobbying hard at the state and federal levels to restrict the rights of judges and juries to hold those who harm you or your family accountable. "Capping" compensation for the most serious injuries, insurance companies argue, is a magical cure-all that will help lower premium rates.

Except there's one glaring problem: a steadily increasing number of independent studies have found that malpractice claims are far from skyrocketing, and limiting compensation for the most severely injured patients doesn't actually lower insurance premiums. Instead, doctors are being price-gouged by insurance companies.

Last month, four new studies received widespread media attention because of their findings. It's important that consumers know the facts in this debate, because these efforts to limit the rights of patients may have far-reaching—and likely disastrous—effects on millions of American families and on the safety of the health care system.

For example, studies published by the Kaiser Family Foundation, the online journal Health Affairs, and the Journal of the American Medical Association concluded that:

• Contrary to ads and statements made by insurance industry, medical malpractice claim payments increased a mere 1.7% per year between 1991 and 2003 (after adjusting for inflation), and have actually fallen an average of 2.4% per year since 2001.

• Malpractice claim payout increases actually slowed to 1.6% a year from 2000 to 2003 - below the rate of inflation.

• Those "jackpot" awards touted by opponents of the legal system are virtually non-existent: 96% of malpractice cases in 2003 were settled out of court for an average of $257,000.

• Escalating insurance premiums, as many economists have pointed out, are likely due to malpractice insurance companies raising rates to compensate for falling investment returns since 1998.

• Doctors aren't disappearing. The number of doctors in every state has increased almost 30% throughout the nation, from 497,140 in 1985 to 709,168 in 2001 - even in states with no malpractice award caps.

• Researches found scant evidence that physicians are leaving one state for another with malpractice award caps. Compared to so-called "no-cap" states, counties in the 27 states with a cap on jury awards for medical negligence and pain and suffering had only 2.2% more physicians per capita.

If malpractice claims aren't increasing, and the number of doctors is in fact growing, then the larger question is, why are insurance companies pushing so hard to take away our legal rights?

That's a question that President Bush and Congressional leaders should ask the insurance industry lobbyists. Currently, four new bills being considered in Congress—H.R.534, S.354, S.366, and S.367—would severely limit the ability of patients to hold bad doctors, nursing homes, HMOs, and drug companies accountable for crippling and deadly mistakes.

Medical errors kill more than 98,000 Americans every year. History and thorough research show that restricting the rights of people injured by medical negligence devastates patients and their families, but does nothing to lower malpractice insurance rates. Even insurers refuse to promise rate reductions if Congress passes these bills. And when states have enacted similar laws, insurers have continued to raise rates.

What's at stake in this debate is justice for those hundreds of thousands of Americans injured or killed by medical negligence. What these recent studies and many others prove is that we need legislation focused on improving patient safety, reducing dangerous mistakes, and lowering insurance premiums for doctors—not more false rhetoric and favors for the insurance industry that only harm patients.

*Todd A. Smith, president of the American Association for Justice, is a partner in the Chicago, IL, law firm of Power Rogers & Smith.