Excellent info. It sounds like this is kind of a high profile political issue vs. and actual problem that impacts rates. But, does this \”problem\” significantly affect doctor\’s med mal premiums or is that more based on a case by case basis?
Mike – how many suits are actually filed nationwide?
I\’m just playing Devil\’s Advocate here for a moment.
There should be 2 effects that would reduce premiums here.
Your nationwide numbers show that about $5000 of malpractice claims are paid for each practicing doctor nationwide. But that\’s just claims paid — that\’s not going to include the costs incurred by the medical insurer to defend these cases. Or those incurred by the medical insurer to defend cases where no claim is paid.
Also, what would those average amounts be if the non-economic damages were capped? Average amounts are very sensitive to large outliers. The reduction in the average paid claim should be a measureable effect of a cap on non-economic damages. If the average amount paid goes down, med mal premiums should go down. If med mal premiums go down, the cost of health care should go down.
The other effect would be decreased lawsuit frequency. We can\’t measure that ahead of time, but I would guess that fewer meritless cases would be filed if the would-be plaintiff knew the amount they could receive was capped.
Very good points also. I think it would very difficult to estimate the money not only on paid amounts, but defense. Not to mention the time involved. I\’m also curious if anyone knows the total US premium levels paid to medical insurers.
Ratemaker,
In 2005 there were 14,021 claims paid in the United States. Of cases that go to verdict, the patients win only about 25%. In Wisconsin, it is about 20%. In Wisconsin, the insurers spend more defending cases than they pay in claims. In 2005 Wisconsin medical malpractice insurers earned direct premiums of $103 million and paid claims of $43 million, for a pure loss ratio of 41%. Not bad for the insurers.
Interestingly, in Wisconsin the entire cost of the medical malpractice system amounts to 0.4 of 1% of our health care costs. In other words, 40 cents of every $100. Caps make very little difference in the cost of health care. Insurance premiums paid by doctors in California, with the most restrictive cap in the country ($250,000)since 1975, are much higher than the premiums paid by doctors in Minnesota, which has never had a cap. The problem with restrictive caps is that lawyers have little incentive to take the risk and incurring the big expenses involved. Thus, many people with legitimate claims never get compensated.
In 2002 the total premiums paid nationwide for malpractice insurance was $7.03 billion. The information is provided by National Association of Insurance Commissioners, 2004 report.
Again, fantastic information. I guess this begs the question…what sort of profit do medical insurers make, and to that end, are high medical premiums warranted? I also wonder what the combined is for medical insurers. Obviously, that is going to fluxuate among carriers, but do the majority make good profits?
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Excellent info. It sounds like this is kind of a high profile political issue vs. and actual problem that impacts rates. But, does this \”problem\” significantly affect doctor\’s med mal premiums or is that more based on a case by case basis?
Mike – how many suits are actually filed nationwide?
I\’m just playing Devil\’s Advocate here for a moment.
There should be 2 effects that would reduce premiums here.
Your nationwide numbers show that about $5000 of malpractice claims are paid for each practicing doctor nationwide. But that\’s just claims paid — that\’s not going to include the costs incurred by the medical insurer to defend these cases. Or those incurred by the medical insurer to defend cases where no claim is paid.
Also, what would those average amounts be if the non-economic damages were capped? Average amounts are very sensitive to large outliers. The reduction in the average paid claim should be a measureable effect of a cap on non-economic damages. If the average amount paid goes down, med mal premiums should go down. If med mal premiums go down, the cost of health care should go down.
The other effect would be decreased lawsuit frequency. We can\’t measure that ahead of time, but I would guess that fewer meritless cases would be filed if the would-be plaintiff knew the amount they could receive was capped.
Ratemaker,
Very good points also. I think it would very difficult to estimate the money not only on paid amounts, but defense. Not to mention the time involved. I\’m also curious if anyone knows the total US premium levels paid to medical insurers.
Ratemaker,
In 2005 there were 14,021 claims paid in the United States. Of cases that go to verdict, the patients win only about 25%. In Wisconsin, it is about 20%. In Wisconsin, the insurers spend more defending cases than they pay in claims. In 2005 Wisconsin medical malpractice insurers earned direct premiums of $103 million and paid claims of $43 million, for a pure loss ratio of 41%. Not bad for the insurers.
Interestingly, in Wisconsin the entire cost of the medical malpractice system amounts to 0.4 of 1% of our health care costs. In other words, 40 cents of every $100. Caps make very little difference in the cost of health care. Insurance premiums paid by doctors in California, with the most restrictive cap in the country ($250,000)since 1975, are much higher than the premiums paid by doctors in Minnesota, which has never had a cap. The problem with restrictive caps is that lawyers have little incentive to take the risk and incurring the big expenses involved. Thus, many people with legitimate claims never get compensated.
In 2002 the total premiums paid nationwide for malpractice insurance was $7.03 billion. The information is provided by National Association of Insurance Commissioners, 2004 report.
Mike,
Again, fantastic information. I guess this begs the question…what sort of profit do medical insurers make, and to that end, are high medical premiums warranted? I also wonder what the combined is for medical insurers. Obviously, that is going to fluxuate among carriers, but do the majority make good profits?