The Doctors' Big Squeeze: Huge Increases in Medical Malpractice Insurance Rates Are Driving Doctors out of Business. What's the Answer?
Boulard, Garry, State Legislatures
It was by almost any measure an unsettling scene. At least 60 specialists at the University Medical center in Las Vegas walked off their jobs this past summer. The reason? The rising cost of medical malpractice insurance.
The mass exodus forced the 24-hour trauma enter, which treats up to 11,000 people a year--victims of car accidents, major falls, and gunshot and stab wounds--to close its doors immediately.
"I can't imagine a sadder day," Dr. John Fildes, UMC medical director, told reporters. Local patients whose conditions could be diagnosed as "severe" would be airlifted to emergency clinics in California and Arizona, Fildes said, adding, "It's very likely that some lives will be lost."
For area residents, the sudden closing of the city's busiest critical care facility was big news.
But for Nevada lawmakers, who would meet in special session only days after the physicians ended their 10-day walkout, it was only one more controversy in a serious public health crisis made complex by its many parts.
"It wasn't as though we didn't appreciate what the doctors were trying to say," says Assembly Majority Leader Barbara Buckley. "But at least they had insurance. We were trying to figure out what to do about the far larger number of physicians in Nevada who were facing the prospect of working without any insurance at all."
THE LEGISLATIVE RESPONSE
On Aug. 7, three days after Nevada Governor Kenny Guinn called the special session, lawmakers passed a medical malpractice bill that set a cap of $350,000 on noneconomic damages.
Two exceptions--after an initial six--survived the process. One involved cases where there is "gross malpractice." The other where there is "clear and convincing" evidence that an award should exceed the $350,000 cap.
The compromise legislation, which passed both Nevada chambers unanimously, "was the best possible result that could be expected in a session that was called to deal with only civil justice reform," says Nevada Speaker Richard Perkins.
"But I am dissatisfied that we did not have an opportunity to address insurance reform at the same time," he adds. "I think they go hand-in-hand. Until those reforms are addressed, probably in the next regular session, we really will not have completed our work."
For decades, of course, physicians have complained about the rising costs of doing business. They have most often pointed to the expense of having to carry insurance in case they are sued for doing something wrong.
But not until 2000, when insurance premiums begin to rise suddenly after a decade of extremely moderate growth, did the complaints become a deafening roar.
"Medical malpractice issues are probably the most important issues facing our industry today," says Dr. Donald Palmisano, president-elect of the American Medical Association (AMA).
"It is an issue because it is something that is driving physicians across the country out of business and stopping younger physicians, whom we need so much, from coming into the market," he says.
A WHOPPING 200 PERCENT HIKE
Both the cost and availability of medical malpractice insurance suddenly became a vital issue in various states when the St. Paul companies, citing losses in the hundreds of millions, announced in December 2001 that it would no longer offer medical malpractice coverage.
St. Paul covered as many as 42,000 physicians and another 73,000 health care workers. But more troubling, St. Paul's market was uneven. In some states, its coverage was in the single digits. In other states, up to 40 percent of working physicians had their medical malpractice insurance through St. Paul.
Nationally, St. Paul represented less than 10 percent of the medical malpractice market. The largest carrier was and remains Medical Liability Mutual Insurance. …