Medical Malpractice Insurance Premiums are on the Rise

When a patient is injured due to improper treatment or medical error, the medical professional that provided treatment gets the blame. Because the above scenario happens all too often, physicians, nurses, and other medical professionals are required to carry liability insurance. This insurance is often very high-priced and covers damages that arise out of a liability claim.

What is Malpractice Insurance?

In return for a premium payment, an insurance company promises to pay damages for covered expenses in the event of a claim. In the case of malpractice insurance, the insurance company pays for most costs associated with the medical liability claim. Some of these costs include personal injury, attorneys fees, and pain and suffering for the injured person, or claimant.

Premiums Become a Burden

Insurance companies base their premiums on statistics. Among a given group of people they insure, there are statistics that tell the insurance company what the chances of losses are among the entire group. They translate this information into the rates that they will charge their customers.

In recent years, physicians have faced the burden of increasing liability insurance premiums. Liability rates vary around the country, because some states have enacted tort reform legislation limiting amount of money that can be paid for non-injury related damages.

In states that have not set caps on damage awards, insurance premiums and cost up to $300,000 per year. Some procedures are more likely to cause injury than others. Doctors who perform these types of procedures are the professionals that end up paying the highest liability insurance premiums. The most risky procedures involve professionals such as obstetricians and gynecologists, neurosurgeons, emergency room doctors, and orthopedic surgeons.

Unfortunately, high insurance premiums have put some doctors out of business. They are unable to practice without insurance, and yet they cannot afford their premiums. Other doctors choose to stop offering risky procedures. Lack of specialized care is becoming a national crisis. Patients have to travel further to find trauma centers in surgical centers that offer care for their conditions.

Physicians Take Action

In 2003, physicians in Pennsylvania took their frustrations to the public domain. Surgeons began requesting leaves of absence and doctors threatened to close their offices, leaving no surgeons available in some areas. One patient was forced to travel 90 miles to receive the needed care. Doctors then protested to state legislators telling them they would leave the state if tort reform was not enacted. In 2004, President Bush appealed to states to act promptly to find effective solutions. Pennsylvania enacted a temporary compensation fund to help affected professionals.

New Jersey adopted a solution that worked. The state enacted a law in 2004 that helps pay the insurance premiums for doctors and professionals having difficulty keeping up with the high costs of their insurance premiums. The fund also sets aside money to pay off student loans of obstetricians and gynecologists. The fund is paid for by annual fees of $75 by chiropractors, dentists, physicians, podiatrists, and optometrists. Every employer in the state pays a three dollar payroll deduction for every employee. The state hopes that their action will keep access to good health care available for patients in the state while helping doctors keep their businesses open.

While all of these options are good places to begin, insurance companies must be part of the broader solution. Insurance companies choose to settle lawsuits rather than proceed to court cases. Most doctors feel this encourages frivolous lawsuits. Many medical professionals would prefer to defend their name in court, and avoid paying millions of dollars to a claimant. Insurance companies believe they save more money by settling lawsuits.

Healthcare facilities and medical professionals are also part of the solution. Controlling situations that lead to medical errors can reduce the injuries that lead to lawsuits. Adopting rigorous training programs, putting new procedures into practice, and investing in new technologies can help reduce errors. Another solution involves hiring adequate staff to care for patients. Overworked employees are more likely to cause an injury.

As health care professionals, insurance companies, and governments work together, insurance premiums will eventually come down. Then healthcare professionals and patients can get back to building good relationships.

Will Federal Intervention Help or Hinder?

When physicians began complaining about their high insurance premiums, President Bush and the Republican-controlled Congress introduced tort reform legislation that would have overridden all state laws governing malpractice. At first glance, this proposition seemed like a good idea. Critics argued that malpractice law has always been governed by the states. Usurping their jurisdiction could possibly create more problems than it helps solve.

Faced with overwhelming opposition from congressional Democrats, the bill was soundly rejected. In 2006, it was introduced once more only to be rejected for the second time. Before action is taken at the federal level, professionals from all sides of the debate should study the issue carefully to determine what impact their actions could have.