The recent Congressional debate related to the nation’s debt ceiling was reminiscent of the furor over skyrocketing medical malpractice premiums and the need for some type of “ceiling” to cap costs and remove accountability entirely from the process. As with any complex problem, if there were a simple solution, then it would have been implemented long ago. However, the solution is not a simple one when it comes to the medical malpractice premium “crisis”, despite the heightened rhetoric employed by various stakeholders in the process.
Curiously enough, there are many stakeholders to be found, another reason the debate is endless and never ending. A financial “status quo” exists that provides some form of stability and certainty for a few of the major participants, but the general public at large, the patients in this equation, is the loser in the end when health care costs increase and access to basic medical care is constrained. A simple review of articles on the topic yields a host of one-sided opinions, typically biased in their representation of the facts and preaching for actions that would tip the scale in their direction.
The reform debate continues, and insurance premiums continue to escalate, forcing many physicians to shut down their practices, risk practicing with limited coverage, or limit access to high-risk procedures to a very few. Occasionally, a new study is released that focuses on one aspect of the problem, only to draw derision from an opposing camp. Nearly 100,000 patients a year die from medical mistakes, not to mention a larger figure of others that are merely injured. The current approach of determining legal liability through the tort system is long, arduous, and unpredictable, but it does little to ensure access or rid the system of incompetent doctors or hospitals.
State governments are responsible for regulating insurers. State boards review complaints related to specific physicians, and attorneys and consumer advocacy groups fight for the rights of injured individuals seeking justice when the system breaks down. Although it appears like a complete “feedback” and self-regulating system, the general consensus of all is that it is broken and must be fixed. For progress to be made, each stakeholder must accept some blame and compromise on a few issues, but in our “polarized” society of today, no “Solomon” is stepping forward to deliver a “balanced” solution.
Here is a brief summary of the current issues:
- Attorneys: How often have you heard the phrase “tort reform” in the past few years? Politicians scream for it, as do lobbyists for lawyers. There are even a few studies that suggest that “caps” on lawsuit claims are working in some states to reduce premiums. The counter is that “60% of liability claims against doctors are dropped, withdrawn, or dismissed without payment” and that costs to bring a case to court are so high, only the ones that have a potential for a large award are ever considered. Direct costs in this area are less than 1% of total healthcare costs, so what amount of benefit would even tip the overall scales in any direction? At the end of the day, the patient suffers and others profit, an outcome that seems the opposite of what was intended.
- Defensive Medicine: The indirect costs are the issue here, but it is very difficult to pin down these costs in a study and conclude that many unnecessary tests would be eliminated as a result of lower malpractice premiums.
- Regulators: Each state has its own way of dealing with the issues, another part of the problem since consistency of approach is not a given in these circumstances. State legislatures also influence cost factors, part of the reason why malpractice premiums vary widely by state.
- Insurance Companies: There is cheap liability insurance available in the marketplace, but many that have offered lower rates before they fully apprised the risks in their individual markets have been swamped with losses and discontinued service. Risk factors are not easy to assess in this arena. Predictability of claims per physician may be easy to calculate. Many suggest that this figure has been flat for many years. However, the level of jury reward and the level of litigation expense can vary widely. Insurers increase their reserve assumptions for this uncertainty, and most state governments confirm their premium requests based on these assumptions. However, the claims-to-premium payout ratio in the industry hovers around 61%, an incredibly low figure that leaves a lot of room for error and waste. Chastising insurance companies has become a national pastime, but their shareholders are not complaining.
The conclusion espoused by all is that reform is necessary in our present medical malpractice insurance system. Some progress has been made in a few progressive states, but more positive steps are required.
