INSURANCE: Premiums Rising, by MATT QUINN

The Boston Globe reports that the largest malpractice insurer in Massachusetts will raise doctors’ premiums 11 percent on July 1. The responses from “outraged” physicians (and insurance company executives) in Massachusetts echo the sentiments of those in Pennsylvania, New Jersey, and other states:

    “Doctors and insurance company executives say premiums are rising because juries are awarding these and other patients more money, which also drives up settlement amounts. They are pushing legislation to limit the amount juries can award patients for pain and suffering. Massachusetts doctors want additional changes, including limiting the interest paid on awards. Doctors also want to establish standards for expert witnesses, such as requiring physicians to be actively practicing in the specialty on which they are testifying.”

There is a push for federal and state legislation to limit jury awards because rising premiums are “becoming unaffordable” to some physicians and are driving some specialists to leave the state in search of greater compensation for their services. Combating rising malpractice premiums would be a top priority of the Bush administration if re-elected, according to Mark Breakstone, a Boston malpractice attorney:

    “If George Bush is reelected and Republicans…control of the Senate, there will be a full-scale assault on many fronts…Bush has made it clear that medical malpractice is a top priority for him.”

Meanwhile, premiums of another kind continue to rise at a double digit pace, but the response – and those impacted – by this crisis are quite different:

    “Health spending is expected to rise well above inflation for years to come. Employers are increasingly passing on the additional costs to their insured workers, causing some workers to opt out, saying they can’t afford it. And, at some workplaces, employers are dropping coverage altogether…If insurance premiums continue to rise about 10% a year, today’s average premium could double in just over seven years. Wages, however, are only expected to grow at about 3% a year.”

While cost shifting and employers who drop coverage because of rising premiums impact the working poor the greatest, more middle class citizens are also feeling pressure:

    “19% of those whose household income is $25,000 to $50,000 are among the nation’s 43 million uninsured. The percentage is even higher among those making less than that: 23%. Even those with household incomes exceeding $75,000 saw a rise in the percent uninsured in the last Census Bureau survey.”

However, the Bush administration supports such cost-shifting because it makes consumers more responsible for the care that they receive:

    “Such high-deductible policies also are supported by the Bush administration, which sees them as a way to help make consumers more judicious users of health care. Congress, too, gave a nod of approval in the Medicare bill, allowing consumers with certain high-deductible health insurance policies to open tax-free health savings accounts to be used for medical care.”

While I certainly believe that elements of the malpractice system need reform to make it more reliable, any legislation that addresses malpractice should concurrently focus on holding physicians more responsible for the care that they provide. Recent studies have concluded that patients receive appropriate care only about half of the time. Some debatably merit less cases receive large jury awards. A far greater number of patients who receive inappropriate care – and are harmed by that care – never see a dime.

To be consistent, perhaps insurers should begin to develop (and the Bush administration should support) the development of high-deductible “physician-directed” malpractice products that allow physicians to choose “cafeteria-style” their coverage in exchange for lower premiums… or to even go without (as 43 million of their patients do) and pay full price for any charges that they incur.

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