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A Self-Inflicted "Crisis"

When NY’s Superintendent of Insurance announced

a 14 percent across-the-board rate hike for medical liability insurance on July

1, 2007, doctors raised a hue and cry that the increase threatened a crisis in

access to care because doctors could no longer afford to practice in New York

and would be leaving the state or otherwise restricting their medical practices.  As in the past,

doctors again blamed the premium increases on skyrocketing claims and lottery

awards and demanded tort reforms that would cripple meritorious malpractice

claims by the victims of medical negligence.

Today Public Citizen released a report that exposes these claims of the

doctors as full blown, deliberate and obvious exaggeration: A

Self-Inflicted “Crisis:” New York’s Medical Malpractice Troubles Caused by

Flawed State Rate Setting and Raid on Rainy Day Fund. These

same claims have been made by doctors during each of the three cycles of rising

premiums that have occurred over the past thirty-plus years. Our report shows

that rising malpractice premiums are not the result of any escalation in the

frequency or severity in malpractice payments. The increase has nothing to do

with patients, lawyers, judges, or our courts. It reflects an insurance problem.

Public Citizen’s

analysis of the best available New York data demonstrates that the

number of malpractice payments made on behalf of doctors in 2006 was at its

lowest point since 1991. The total amount of malpractice payments for doctors,

adjusted for inflation, was near or below fifteen year average in three of the

past five years.

The amount of malpractice litigation in New York has not changed appreciably

over the past eleven years. Thus, it is clear that the 14 percent increase in

premiums did not reflect a sudden or dramatic change in either malpractice

payments or litigation behavior.

In fact, the records of the Superintendent of Insurance show that the recent

rate hikes come after a period of abnormally low rate increases. During the

eight year period from July 1, 1995 through June 30, 2003, medical malpractice

premiums actually declined by an average of 1.4 percent per year. The average

rate hike since 1991 has been only 3 percent, less than half the rate of medical

services inflation.

Claims by the doctors that they can no longer afford to practice medicine in

New York and are leaving or restricting their practices are complete hyperbole.

The latest statistics show that New York ranks near the top among states in the

number of patient care physicians per 100,000 people with 339, compared to the

national average of 239. Only two other states – Massachusetts and Maryland –

along with the District of Columbia have higher physician/population ratios. The

number of obstetricians is keeping pace with the population of child-bearing-age

women and New York’s birth rate. The number of board certified specialists in

the important fields of anesthesiology, emergency medicine, internal medicine,

neurosurgery and surgery has also increased substantially over the past eleven

years. Currently, New York is training more doctors and fellows than any other

state and about 90 percent of those surveyed say they plan to practice in the

area where they trained.

The Superintendent of Insurance, unlike the doctors, cited solvency problems  in the insurance industry as the reason for the rate

increases. To the extent solvency is a problem, the causes may be traced to the

intractable underwriting cycle that characterizes the entire property-casualty

insurance industry. Rate hikes appear when the underwriters for reasons of

competitive behavior and financial trends in the industry worry over the

adequacy of their reserves and raise rates in response. New York also

contributed to the present malpractice insurance problems when in the 1990s they

raided the reserves of the states high-risk medical liability fund to the extent

of $691 million. Now the chickens are coming home to roost for that unwise

diversion of rainy day funds.

As Tom Baker said in his recent book, The Medical Malpractice Myth: “These

are insurance problems, not tort problems, and they need insurance solutions.”

Doctors would be better advised to concentrate their efforts on reducing

avoidable medical errors rather than clamoring for tort reforms that deprive

those they kill and injure of the compensation they deserve. In 1999, the Institute of Medicine noted that medical errors kill

as many as 98,000 people in the U.S. every year and called on the nation to cut

such mistakes in half in the ensuing five years. Unfortunately, New York is

failing to make significant headway in reducing avoidable medical errors, and

may in fact be experiencing an increase in such errors. In 2005, the number of

adverse events exceeded their seven year average in ten of 22 categories

identified by NYPORTS and Medicare as adverse events.

New York needs to improve its oversight of doctors. Between September 1990

and December 2006, 6,186 doctors made two or more malpractice payments. This

small number of doctors is responsible for a whopping 71 percent of dollars paid

out on behalf of doctors in New York since September 1990.

Like Public Citizen, the New York’s Comptroller has called

for improved physician oversight. Needed action includes, enforcement of

existing guidelines, expanding criteria triggering investigation, proactive

identification potential incidents of misconduct, improving collection and

sharing of information with other agencies, completing investigations promptly

and the state should provide more funding for this oversight.

Lest we need reminding, in the words of Tom Baker,

a leading authority on insurance and law:

“One very clear conclusion emerges from the research on medical

malpractice and medical malpractice lawsuits: The real medical malpractice

problem is medical malpractice. It is not pretty to say, but doctors and nurses

make preventable mistakes that kill more people in the United States every year

than workplace and automobile accidents combined. Any research-driven approach

to medical liability reform must start with this fact firmly in mind.”

Originally post on Tort Deform.