Study: Medical Malpractice Payouts Rise Only 4%

The Insurance Journal
June 1, 2005


Contrary to popular belief, growth in malpractice payments was consistent with increases in health care spending between 1991 and 2003.

In fact, payments grew only 4 percent per year during that period, according to a study released by the journal Health Affairs. According to the authors, extreme judgment awards did not drive the increases.

Meanwhile, another online Health Affairs study finds that physicians are gravitating toward states that have capped malpractice awards. This trend is particularly pronounced among obstetricians, who are most vulnerable to lawsuits. Between 1975 and 2000, the number of obstetricians in states that had enacted caps in the 1980s increased five times more than in those states without caps (40 percent versus 8 percent).

"We already know that physicians' fears related to malpractice lawsuits affect how they practice medicine. Now we're finding that these fears affect where they choose to practice," said Health Affairs founding editor John Iglehart. "Yet these concerns seem out of proportion to what's really happening with malpractice suits - and so, for that matter, are the sharp increases in malpractice premiums."

In 2002, on average, malpractice premiums for internists, general surgeons, and obstetricians rose 20-25 percent. Specialists in some states have seen one-year increases of 75 percent. Physician groups contend that premiums are soaring because of out-of-control malpractice payments and have called for a nationwide $250,000 limit on noneconomic damages. President Bush has endorsed that proposal.

Yet 96 percent of malpractice cases never go to trial and are settled out of court, according to data by the authors of the first Health Affairs study. News reports about very large jury verdicts can be misleading, they say, because the final award is often reduced substantially.

"The large jury awards that attract so much public attention actually are rare events and comprise a very small portion of all malpractice payments," said lead study author Amitabh Chandra of Dartmouth College. "They're certainly not key drivers of malpractice insurance increases." Instead, he and his colleagues argue that the increase in payments parallels the increase in health care spending. Factors such as state regulation of malpractice insurers, as well as changes in investment income, are better explanations for the increase in malpractice premiums.

The study by Amitabh Chandra and colleagues can be read at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.240.

The researchers analyzed data from the National Practitioner Data Bank, where all malpractice payments made on behalf on a physician must be reported. They found that between 1991 and 2003:

* The number of malpractice payments from trials and settlements remained stable.
* Average payment size grew 4 percent per year and leveled off more recently, reflecting increases in medical costs
* The very largest payments grew less than payments overall.
* Contrary to popular perception, payments for cases alleging operation of the wrong body part, or those where surgical instruments were left behind, account for less than 2 percent of all malpractice payments.


Malpractice Caps Influence Where Physicians Practice

Still, the second Health Affairs study found that states that have capped nonmonetary awards for pain and suffering and punitive damages have also attracted more doctors into practice. Twenty-seven states now have such caps.

In their analysis of state policy responses to the last two malpractice insurances crises, study authors William Encinosa and Fred Hellinger of the federal Agency for Healthcare Research and Quality (AHRQ) say that caps on payouts appear to influence where physicians decide to practice. While the median number of physicians per 100,000 residents grew 83 percent between 1970 and 2000 in states that have never had a cap, that number grew 102 percent in states that enacted caps in the 1980s. Surgeons and obstetricians, two groups that are particularly vulnerable to lawsuits, appear to be most influenced by the presence or absence of caps.

Overall, the researchers found caps accounted for about 5 additional doctors per 100,000 people in the three years after their enactment. States with caps of $250,000 saw greater increases in surgeons and obstetricians than did states with caps of $400,000 or higher. These effects were even larger for rural counties, which have difficulties attracting physicians.

Thee study by Encinosa and Hellinger can be found at at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.250.

The following states have laws limiting potential damages in medical malpractice lawsuits: Alaska, California, Colorado, Florida, Hawaii, Idaho, Indiana, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Utah, Virginia, West Virginia, and Wisconsin.


Copyright © 2005 by Wells Publishing



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