• Do medical malpractice premiums go up and doctors flee when damages caps are lifted? Wednesday, September 3, 2014
    The medical industry sounds quite a bit like this bird when it comes to predicting what will happen when medical malpractice damage caps are dropped, with just as much accuracy.

    The medical industry sounds quite a bit like this bird when it comes to predicting what will happen when medical malpractice damage caps are dropped, with just as much accuracy.

    In a trend that began when California passed the Medical Injury Compensation Reform Act of 1975 (better known as MICRA), some states have enacted caps on compensation for people harmed by medical negligence. Such caps typically cover what are known as “noneconomic” damages, sometimes referred to as “pain and suffering.” The term “noneconomic” is meant to differentiate from what are called “economic” damages, such quantifiable sums as medical expenses and lost wages. Noneconomic damages are a more subjective compensation for such harm as loss of limbs, loss of mobility, loss of vision or hearing, loss of the ability to have a child, brain damage, disfigurement, chronic pain, or the life of a family member killed by medical negligence.

    Advocates of caps argue that any increase in the cap will result in dire consequences. They say an increase in the potential liability for medical negligence will cause insurers to raise premiums for medical malpractice insurance, which in turn will cause doctors to either leave the field or move to a state that has a cap, thus reducing access to health care for residents of the state where the cap was increased.

    Fortunately, what happens when caps are lifted is not merely a theoretical question. In recent years, courts in three states have struck down caps on noneconomic damages in medical malpractice cases, and none of the three states has seen either a spike in malpractice premiums or a reduction in the number of doctors per capita.

    In February 2010 the Illinois Supreme Court found the cap violated the state constitution’s separation of powers clause, by giving the legislature authority to determine a matter that should be determined by judges and juries. A month later the Georgia Supreme Court found the cap there violated citizens’ constitutional right to trial by jury, in that the cap could override the jury’s determination of damages. Georgia’s chief justice wrote, “The very existence of the caps, in any amount, is violative of the right to trial by jury.” Then in 2012 the Missouri Supreme Court also found the cap “infringes on the jury’s constitutionally protected purpose of determining the amount of damages sustained by an injured party.”

    What happened to malpractice insurance premiums in these states after the caps were removed? Medical Liability Monitor conducts an annual survey of malpractice rates for physicians in three specialties: internal medicine, general surgery and OB/Gyn. (In their words, “We believe these specialties reflect the wide range of rates among specialties.”) The chart below reflects the average of the three specialties for the given year in each state.

     

    2010 2011 2012 2013
    Georgia $46,765 $46,765 $44,064 $43,215
    Illinois $71,616 $71,753 $72,011 $70,466
    Missouri $42,563 $42,563

     

    Note Georgia never saw an increase in premiums, and in 2013 (the most recent year of the survey) premiums were 7.6% below what they were the year the cap was lifted. In Illinois, after the average premium rose just 0.2% in the first year after caps and 0.4% the second year, premiums fell in 2013 and were 1.6% lower than they were the year the cap was struck down. Missouri has just one year of survey data since its cap was removed, but the average malpractice premium was unchanged (and, it should be noted, almost 25% lower than what it was in 2010, when the cap was in effect).

    Where is the evidence that lifting caps raises malpractice premiums?

    Proponents of caps have argued that OB/Gyns would be especially sensitive to the elimination of caps due to the high-risk nature of childbirth. But the Medical Liability Monitor numbers only for that specialty don’t show any spike in premiums after caps were removed:

     

    2010 2011 2012 2013
    Georgia $71,640 $71,640 $67,443 $67,608
    Illinois $103,173 $104,273 $104,979 $103,558
    Missouri $64,884 $64,884

     

    In Georgia, premiums for OB/Gyns never rose after the cap was struck down and in 2013 were 5.6% lower than when the court ruling was issued. Missouri’s OB/Gyn premiums were unchanged by the elimination of the cap. In Illinois OB/Gyn premiums in 2013 were a mere 0.4% higher than they were the year the cap was ruled unconstitutional.

    Now to look at the number of physicians per capita in the affected states. The American Medical Association lists the number of physicians per 100,000 residents in each state as part of its annual publication Physician Characteristics and Distribution in the U.S. The volume with data for 2013 will not be published until November, so we can’t quantify the affect of eliminating the cap in Missouri, but we can see what has happened since caps were struck down in Georgia and Illinois:

     

    2010 2011 2012
    Georgia 247 255 260
    Illinois 322 330 335

     

    Neither state saw a reduction in the number of doctors per capita after the cap was dropped. Georgia saw a 5.4% increase in two years, while Illinois saw a 4.0% increase.

    In California, the state where caps began, an initiative on the November ballot, Proposition 46, would not eliminate the state’s $250,000 cap on noneconomic damages (the lowest in the nation; only Montana has a cap as low) but would update it so that it would have the same economic value as it did when it was enacted in 1975, reflecting 39 years of inflation (the cap has never been changed since it was implemented). Predictably, the medical industry has proclaimed malpractice premiums will soar and doctors will flee if Prop 46 is passed (in which case the cap would not be eliminated but adjusted for inflation to about $1.1 million). But they haven’t offered any kind of evidence those things will happen…because there is none.

    –J.G. Preston

    J.G. Preston is press secretary for Consumer Attorneys of California, an organization whose members include some attorneys who represent victims of medical malpractice. CAOC supports Proposition 46. Some members of CAOC are on the board of directors of the group that funds ProtectConsumerJustice.org.

  • Where’s the evidence that doctors flock to states with caps on medical malpractice damage awards?
  • If medical malpractice insurance rates are driving doctors out of business, why are there more doctors?
  • Even without malpractice caps, New York has added more doctors per capita than Texas
  • Caps, no caps: the number of medical malpractice suits is down either way
  • Medical negligence damage caps in Texas benefit only doctors, insurers

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2 Responses to “Do medical malpractice premiums go up and doctors flee when damages caps are lifted?”

  1. Bill newkirk says:

    Can I share this on my Facebook page?

  2. jg says:

    Absolutely, Bill.


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