Malpractice Premiums Increase While Patient Safety Is On The Decline

In society, we tend to collectively attach ourselves to something that sounds right, rather than taking the time to carefully consider all of the facts. One such instance is in the case of medical malpractice. Ask anyone and they will tell you (based upon millions spent on ads run by insurance companies and the chambers of commerce), “Premiums are outrageous as a result of people suing the doctors and bilking the system.” Sounds true? Wrong.

Since 2003, payouts to patients nationally have steadily declined to the tune of 51%. Still however, people are calling for “more reform” when the current reform has worked... for doctors.

By placing a cap on how much compensation a patient can receive, state legislatures have created a disincentive for hospitals and doctors to practice safer medicine. Regardless of how negligent a medical provider is, by limiting damages recoverable by the victims of medical negligence, the medical profession essentially feels that, “No matter how negligent we are, we will only pay for a fraction of our error.” Consequently, medical error rates remain dangerously high.

"Mistakes are happening every day in every hospital in the country that we're just not catching," says Dr. Albert Wu, an internist at Johns Hopkins Hospital. More than 250,000 people every year die as a result of medical errors, and medical error injuries are in the millions. These combined numbers result in medical malpractice being “the third leading cause of death" in the country, according to Dr. Peter Pronovost, an anesthesiologist and critical care physician at Johns Hopkins Hospital.

If we decided to adopt the same philosophy regarding auto insurance, we could rear-end a Rolls Royce and pay no more than if we hit a Dodge Neon. Unfortunately, that absurdity is commonplace in the medical field. They are saying the same thing, “Whether we give you a scar or we permanently disable you, even kill you or a loved one, we’re only offering a one-size fits-all package.”

Still think more reform is needed? The statistics show that while medical malpractice premiums in Missouri have increased from $108 million to $176 million over the past 20 years (an average of only 3.15% annually), the number of patient injury and death payouts have fallen dramatically from 16,000 to 8,450, a 47% reduction. From 1991-2011 the cost of annual claim payments, including legal defense fees, fell from $76 million to $61 million; 60% of claims paid were less than $250,000 and 80% were under $500,000. Yet premiums continue to rise as the insurance companies air misleading ads claiming that “excessive” jury awards compel them to raise prices.

Since 1991 the number of insurers selling malpractice insurance in Missouri has grown from 72 to 93, an increase that wouldn’t happen were the business of malpractice were unprofitable. This business is so profitable in fact, a new report reveals that the average profit margin for the top 10 medical malpractice insurers is twice as high as 50 of the most profitable Fortune 500 companies. A report done by the American Association for Justice found that by distorting profits and losses, insurers have created bogus malpractice insurance “emergencies” so that lawmakers would consider limiting the legal rights of injured patients.

The president of the American Association for Justice said, “While health care costs skyrocket, Congress should not give another handout to malpractice insurers that have average profits higher than 99 percent of Fortune 500 companies. Congress needs to focus on patient safety, not efforts that will pad the pockets of insurance companies at the expense of Americans’ legal rights.”