The Health Care Crisis Caused by Medical Malpractice Litigation Cases

People hear a lot of conversation these days about rising health care costs. It is true that premiums that people pay for health insurance are skyrocketing at alarming rates. A lot of people want to lay the blame at the feet of the health insurance companies. Others blame healthcare professionals. The truth is much more complicated. It is possible that a large portion of rising of healthcare costs is due to the burden placed on healthcare professionals by medical malpractice insurance premiums and lawsuits.

Rising Costs Cause Doctors to Cry Foul

Healthcare professionals face a dilemma in this day and age. The law requires most of them to carry professional liability insurance, otherwise known as malpractice insurance. In years past, this type of insurance was not out of reach of most healthcare professionals. However in the last 10 years, insurance premiums have skyrocketed causing some professionals to face difficult choices.

Professional liability insurance or malpractice insurance pays for costs associated with litigation and claims for medical negligence. Most of these claims are associated with injuries caused to a patient by the insured professional. For example, if a patient receives the wrong medication leading to an injury, the person responsible for the error is liable for damages. If the patient chooses to seek a lawsuit, the healthcare professional’s medical liability insurance will pay for most of these damages.

The Unseen Effect on Health Insurance Companies of Medical Practice Litigation

In cases where patients do not seek to file a lawsuit against the offending healthcare professional, their costs for treatment of their injuries are usually paid for by health insurance. This is one way that health insurance companies are impacted by medical errors.

Health insurance companies are obligated to pay for claims related to cover causes of loss. In plain English, that means they should pay for claims that are generally related to illness. In many states, health insurance companies exclude coverage for injuries suffered in auto accidents or in work-related incidents. At first glance this may sound callous and uncaring. In reality, these types of incidents are usually covered by workers compensation and auto liability insurance.

New technology has been a big benefit in the medical field. However, medical facilities have to pay for these expensive new technologies. They do that by charging higher amounts for these services such as MRIs. Sometimes, a doctor will order an MRI when other less expensive test could possibly have been used. They do this to make sure they have covered all their bases to avoid being accused of negligence. This definitely has a big impact on health insurance costs.

Do Professional Liability Insurance Companies Play a Part?

Insurance companies once charged much lower premiums for medical liability insurance. In the 1990s, rates were very inexpensive. Since 1994, the cost of damages associated with malpractice lawsuits has increased to $3.5 million per year. Insurance companies that paid these awards found they had not charged enough money in premiums to cover their losses. Insurance companies pulled out of the malpractice insurance market. The companies that were left began charging higher and higher premiums.

As medical professionals were hit with increasing premiums for medical liability insurance, health insurance companies began to reduce the amount they paid healthcare professionals for services rendered. This situation left many professionals with difficult choices. Unable to increase service charges, many professionals had to retire early, quit offering high-risk procedures, or leave the state where they practiced. None of these were good options.

Frustrated physicians threatened to strike in several states. Facing a crisis in available healthcare, lawmakers began listening to their beleaguered constituents.

Options under Consideration

Among the options considered, lawmakers and physicians believed that tort reform was the biggest cause of higher insurance premiums. Many state legislators enacted legislation that capped the limits that a claimant could receive. As time went by, insurance premiums did begin to decrease.

Critics of tort reform believe that damage caps infringe upon basic civil rights. They argue that an injured patient has the right to have their case heard by a jury. If the court finds in favor of the claimant, a jury of their peers would be more likely to sympathize with them and award them an appropriate amount of money for the injuries they received.

Other options are on the table to avoid losing qualified healthcare professionals and sacrificing the quality and availability of health care for patients. While none of these options is perfect, it is crucial that all parties involved work together to bring down the costs of liability insurance premiums. The healthcare industry as a whole is searching for ways to reduce the situations that lead to errors. Finally, the insurance industry has a role to play as well. Not only must professional liability insurance be affordable, but insurance companies must also consider the lessons they teach the public when they settle cases to avoid court.