Medical Negligence Myth #5: Tort Reform Will Lower Insurance Rates

Yesterday’s post, Myth #4 – Medical Malpractice Claims Drive-Up Doctors’ Insurance Premiums, discussed the false correlation between malpractice lawsuits and increases in insurance premiums.  Today’s post, Myth #5, deals with converse theory – whether medical liability reform (a form of “Tort Reform) will result in insurance companies lowering doctors’ insurance premiums.  The evidence shows this will not happen.

The evidence shows that any savings to insurance companies — in the form of lower payouts due to damages caps — are not passed down to doctors in the form of lower premiums. The savings are not passed down at all.

Indeed, this myth is easy to debunk because we can look at states that have adopted medical tort reform to see whether insurance rates have gone down.  Texas, for example, enacted a $500,000 cap on non-economic damages for malpractice claims in 2003, believing such caps would translate into lower insurance premiums and attract more doctors.

As the AAJ report shows, although the number of doctors in Texas slightly increased after caps were imposed (as did all states), the increase was no different than before the caps were in place.  The increase has remained steady, as it has throughout the country.  If malpractice damage caps resulted in significantly lower premiums, the increase in doctors practicing in Texas since 2003 should have been more dramatic.

More importantly, since enacting caps on non-economic damages in Texas, doctors’ premiums have gone up instead of down.  The AAJ report cites GE Medical Protective, the country’s largest medical malpractice insurance provider, that said “caps had a negligible impact on rates” — and proceeded to raise doctor premiums.

The same holds true for California — which is depicted in the chart above.  After California enacted laws capping damages in medical malpractice actions, doctors’ insurance premiums continued to increase even faster than in previous years.  The way California leveled-off premiums was by passing legislation aimed at the insurance industry – by capping their insurance rates.

The AAJ report also cites a number of “pro tort reformers” who admit that, despite what has been argued, tort reform will do little, or nothing, to curb rising premiums. It will only serve to further curb the rights of individuals to seek justice after being wronged.

Those who argue for malpractice reform often cite the five myths discussed this week by our top-rated Chicago personal injury lawyers. Such arguments clearly ignore patient safety, as well as the empirical evidence.  Hopefully, the Senate will debate its health care bill using facts, not myths.

For a Free Consultation with one of our Chicago personal injury and malpractice attorneys, call Passen Law Group at (312) 527-4500.