Two studies published in late November 2016 by the Americans for Insurance Reform, a coalition of nearly 100 consumer and public interest groups representing more than 50 million people, concluded: “Severe rates hikes experienced by doctors during the three past insurance crises were not the result of exploding claims or tort system costs but rather the industry’s own boom and bust economic cycle, dictated by the state of the economy and insurance industry profitability, including bond and stock market gains or losses.”
Premium Deceit 2016; The Failure of “Tort Reform” To Cut Insurance Prices
One study, entitled Premium Deceit 2016; The Failure of “Tort Reform” To Cut Insurance Prices, examined the impact of “tort reforms” and “caps” on damages enacted in response to the 2002-2006 medical malpractice insurance crisis, and found:
· States that enacted new limits on patients’ legal rights in medical malpractice cases saw an average 22.7% decrease in pure premiums from 2002 to the present – but states that did nothing saw a larger average drop of 29.5%.
· States that enacted only caps on damages saw an average 21.8% decrease in pure premiums from 2002 to the present – but the states that did nothing saw an even greater average drop of 28.9%.
The study concluded: “In sum, the data do not support any conclusion that limiting patients’ legal rights – including capping damages – results in lower premiums for doctors.”
Stable Losses/Unstable Rates 2016
The other study, entitled Stable Losses/Unstable Rates 2016, found:
· When adjusted for medical care inflation, both premiums and claims per physician are currently at their lowest level in four decades.
· When adjusted by urban consumers CPI index (a more conservative inflationary adjustment) premiums are the lowest they have ever been, and claims are at their lowest since 1982.
· Total medical malpractice payouts have never spiked and have generally tracked the rate of inflation, while premiums for doctors have sharply increased three times over the last 40 years: 1974-1977; 1985-1988, and; 2002-2006.
· At no time were these three periods of severe rate hikes (i.e. “hard” insurance market) connected to any increase in claims or tort system costs, which have remained stable.
The study concluded: “These data clearly show that periodic liability insurance crises have always been driven by the insurance cycle and not a tort law cost “explosion” as insurance industry and organized medicine lobbyists have claimed. Laws that restrict the rights of injured patients to go to court do not produce lower insurance premiums for doctors. To lower rates or to prevent future liability insurance crises, lawmakers should focus instead on controlling the power and the abuses of the insurance industry.”
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