Nov. 29, 2007

New York Should Look at Itself and its Doctors to Address Medical Malpractice Woes

Statement of Joan Claybrook, President of Public Citizen

This past summer, Gov. Eliot Spitzer set up a task force to assess the state of medical malpractice and medical malpractice insurance in New York. We’re here today to offer our findings on the medical malpractice insurance problems the state is facing and provide a road map to solve them.

Ever since President Reagan started attacking lawyers for political reasons, it’s been fashionable to blame the victims instead of the people or corporations responsible. New York’s insurance companies and doctors would be delighted to do this right now. But it’s vital that New York’s policymakers not be railroaded into eviscerating citizens’ legal rights in response to the insurance companies’ and doctors’ exaggerated claims of “crises.”

There has been much hand-wringing about the costs of medical malpractice in New York, but the discussion has almost entirely ignored the most important costs of all: those borne by the victims. Large medical malpractice payments invariably compensate for horrific outcomes – including death, brain damage or disfigurement – that none of us would trade for any amount of money if we could have prevented them. Reducing needless medical errors should be the task force’s top priority. If the state cleans up its act, the problems that the insurance companies and doctors bemoan will disappear, and receiving medical care in New York will become a lot safer.

According to the findings of the report we are releasing today, the facts underlying New York’s situation are clear. The current problems were caused by several things: first, the previous administration’s raid on the rainy day fund of a state insurance program; second, the state’s inept regulation of medical malpractice insurance rates; and third, the state’s continued failure to discipline dangerous doctors adequately.

Since so many myths are floating around, we’d like to take this opportunity to give you some facts:

• The fact is that in the 1990s, the state took nearly $700 million from a program that insured doctors who were not able to obtain commercial insurance. The program has since suffered terrible losses that the state’s insurance companies are required by law to cover. Had the surplus been left intact, the current so-called “crisis” likely would not exist.

• The fact is that medical malpractice rate increases over the long haul have been modest. Overall, between 1991 and 2007, rates have increased only an average of 3.5 percent per year. That’s barely half the level of medical inflation that all of us are paying. In fact, for eight of those years, rates didn’t rise at all. The doctors got a free ride in the 1990s, and it’s understandable that they have to pay a little more now to make up for it. In the future, the state should resist the temptation to suppress rates to appease doctors because it only results in the need to play catch-up later on.

• The fact is that complaints about medical malpractice lawsuits breaking the health-care bank are absurd. Malpractice payments on behalf of doctors were only three-fifths of 1 percent of New York’s total health care costs in 2004. Premiums paid by doctors were 1 percent of total costs. Compare that with The New England Journal of Medicine’s finding that health administration costs account for more than 30 percent of our health care bill, and it’s easy to see where New York should look to find real savings.

• The fact is that complaints about a doctor shortage in New York are not just exaggerated, they are utterly false. New York has more doctors right now and more specialists than at any time for which we were able to obtain data.

• The fact is that just a tiny percentage of bad doctors are overwhelmingly responsible for medical malpractice payments in New York. Consider this: Only about 1 percent of New York’s doctors are in the state’s program for physicians who cannot obtain commercial insurance. And yet these doctors’ medical malpractice payments have been so massive that they are largely responsible for the insurance industry’s current troubles because the commercial companies have had to cover their losses. The state needs to immediately take a hard look at whether these doctors should continue practicing.

• The fact is that medical malpractice litigation is at an all-time low in New York. In the past five years, we have seen the fewest medical malpractice payments of all the years for which data is available.

• The fact is that complaints about the severity of payments miss the point. The focus should be on the horrific severity of the injuries. The five categories of payments responsible for the largest payments in New York each cover permanent injuries or death. Death accounts for more than 400 payments per year.

• The fact is that the proposal that New York take away the legal rights of babies born with neurological injuries and leave their care to a state-run fund is both unjustified and unwise. The malpractice payments to care for these babies rank only fifth among categories of dollars paid out for medical malpractice in New York. Meanwhile, similar state-run funds have been disasters in the two states that have tried them. New York needs to worry about reducing the number of newborns with malpractice-induced neurological injuries – not about how to deprive newborns of their legal rights.

• The fact is that New York’s discipline of its bad doctors is atrocious. The Office of Professional Medical Conduct has failed even to learn about doctors practicing in New York who have been suspended by Medicare and Medicaid, or who have made so many malpractice payments that the office is required to investigate them. The state’s negligent oversight was illustrated by recent revelations that health officials delayed notifying more than 600 people that they had potentially been exposed to deadly diseases by a single physician improperly reusing syringes. Astonishingly, the state regards its investigation into the physician, Dr. Harvey Finkelstein, as “non-disciplinary.”

To resolve its current problems, New York should replace the money it expropriated from the rainy day fund and institute a system that guards insurance regulation against political whims. But most important, the state should overhaul its doctor supervision system. Far too many people are dying or suffering permanent injuries because the state hasn’t fulfilled its responsibility to ensure patients are treated safely.

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