Medical Malpractice Premiums & Tort Reform

Tort reform is needed, some say, because the litigation causes medical malpractice insurance premiums to rise. This is unfair to doctors who are forced to pay the growing rates, even if they do not make mistakes. Wouldn’t curbing the rights of patients to sue result in lower payments for good doctors?

The evidence is clear: tort reform does not affect insurance premiums. The Center for Justice and Democracy summarizes the evidence.

Premiums Aren’t Actually Rising
For one thing, suggestions that there is a crisis of rising med mal insurance premiums are wrong. The industry’s own Medical Liability Monitor noted in July of this year that “premiums are still declining.”

Other analyses of the situation present an ever starker picture. One report from A.M. Best explains that the premiums have been declining for nearly the last decade. The report went on to note that “direct written premiums for this composite is down almost twenty percent since its peak in 2006.” In other words, there is no mounting crisis to solve.

The Drops Are Not Connected to Tort Reform
Closer examination also reveals that those drops are not tied to passage of legislation in any specific state or city. A report from Americans for Insurance Reform in 2009 found that “states with little or no restrictions on patients’ legal rights have experienced the same level of liability insurance rate changes as those states that enacted severe restrictions on patients’ rights.”

One need only look at our neighboring states for a comparison. Missouri had a damage cap law in place since the mid-1980s. Iowa never had a cap. Over the last half decade Missouri’s premiums increased 1% while Iowa’s decreased 6%. States that have seen significant med mal insurance premium rate hikes over the last five years-like Utah, Nevada, and Florida-all have significant damage cap laws. The evidence is clear that damage caps do not correlate with premium rates.

Yet, despite this reality, proponents continue to suggest that elimination of patients’ rights is necessary to lower med mal premiums. Apparently the evidence isn’t important when making sweeping political claims.

From Their Own Mouths
Lawyers working on medical malpractice cases often argue against these laws. Our claims are frequently discounted for our apparent conflict of interest. But when it comes to medical malpractice lawsuits and med mal premiums, you do not have to take our word for it. Medical industry insiders have themselves frequently explained that premiums are not affected by cap laws.

For example, the American Insurance Association noted that “[T]he insurance industry never promised that tort reform would achieve specific premium savings.” Even the General Counsel of the American Tort Reform Association said that “[M]any tort reform advocates do not contend that restricting litigation will lower insurance rates, and I’ve never said that in 30 years.”

The stark reality is that damage caps do not affect med mal premiums. This mirrors the incorrectness of so many claims by tort reform proponents. All community members should be prepared to fight back against those making promises of untrue benefits.

See Our Related Blog Posts:

Tort Reform Does Not Affect Physician Supply

CJ&D Briefing Book: Too Many Medical Tests & Medical Profit

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