‘Super losses’ in US healthcare on the rise

Hiscox ^ | March 13, 2012 | Staff

[bkopto]

The overall cost and frequency of so called $50m plus ‘super losses’ in the US healthcare insurance sector are on the rise according to specialist healthcare insurer Hiscox. Despite the clear benefits of the implementation of quality and patient safety measures, the large losses keep on getting larger with, in the last two years alone, juries awarding well over $1bn in total damages for just seven medical liability cases.

While there are many healthcare institutions who continue to risk manage their more modest loss levels well, many others are experiencing mid-sized losses getting steadily larger together with a rise in frequency of catastrophic medical loss. With record awards being made in cases ranging from inadequate staffing at nursing homes, to medical negligence in hospitals, seven US states in 2011 declared their largest ever medical malpractice awards. While some cases have been, or will be revised down on appeal, there are clear signs that the overall trend in ‘super losses’ is upwards.

Commenting, Ian Thompson, Senior Vice President, Healthcare, Hiscox, said: “We have real fears that the bigger so-called ‘super losses’ are getting worse and becoming more frequent. In addition there is increasing evidence that batch losses, where the insured has the ability to place losses together under a common aggregating cause, are also increasing in size and frequency – the recent case involving the overuse of coronary stents in Maryland is a good example of a batch loss that certainly has the potential to become catastrophic.”

Nick Williamson, Healthcare Actuary at Hiscox, added: “According to Hiscox figures*, more than half of all the largest healthcare claims in history have been paid in the last five years. Our research also suggests that losses above $5m are increasing at a concerning rate, from around 0.25% of all losses in 2000, to 0.7% currently and 1% by 2014; that represents a significant change.”

Ian Thompson concluded: “Given the question marks over the new Accountable Care Organization model as well as concern we might see another demonising of the Managed Care industry the trend for all losses, big and small, could see more worsening, and in different areas. We are already seeing numerous and very public reports coming out of the Hospital Data Privacy area, and challenging times appear to be ahead. With insurers charging premiums for catastrophic events often based on a 1 in every 200 or 300 year loss, it is time that the healthcare insurance sector took a careful look at its catastrophic exposures.

[bkopto]

Table at the link shows the highest payout as follows:

January 2012 Florida $168m Brain damage following surgery.

Others regard birth injury. Who in their right mind would want to be a neurosurgeon or obstetrician?

When such services become scarce, thank your local trial lawyer and female jury pool.

[Jacquerie]

All problems will be solved when Chairman Obama and his glorious commissars eliminate the evil health insurance companies that rip off the peasants.

[bigheadfred]

There really should be a cap on awards like this. More along the lines of how much income that person would have lost in a normal working life, if the damage prevents them from working.

[CurlyDave]

There really should be a cap on awards like this. More along the lines of how much income that person would have lost in a normal working life, if the damage prevents them from working.

Having been on the receiving end of "managed care" for a number of years, I am not in favor of any limits on awards. I fully believe that the only thing which stood between my family and medical care worse than that received in most third-world countries was the threat of massive lawsuits.

[formosa]

I wonder how many of these cases were trumped up by ambulance chasers? There are individuals in this country who actually make a living from suing people.

[bkopto]

I am not in favor of any limits on awards...

Well then, with that attitude, please don't be surprised when the day finally arrives when you WILL be recieving third-world medical care, AT BEST. Because there will be none other to be had and no one will want to assume the risks in treating YOU.

[CurlyDave]

I very much doubt that that day will ever arrive.

The entire purpose of mega awards is to make it far less expensive for insurance companies to provide care where no one “falls through the cracks” than to provide care based on a minimum standard which is far below this.

With a database as large as most insurance companies have, it is all to easy to decide that “we will provide a system where one patient in 1000 has a negative outcome based on our error” if the cost of awards to patients who fall into the 1 in 1000 is known and limited. OTOH, if the potential cost of those 1 in 1000 patients is much larger and potentially unlimited, the incentive to provide a system where 1 in 1,000,000, or even 1 in 100,000,000 is maltreated suddenly increases.

[redgolum]

Actually, it makes insurance companies even less likely to provide care. If the risk of lawsuits is to great, they will not approve the procedure. My father had to sign a release limiting his right to sue before he had brain surgery. Or the doctor wouldn't have risked the surgery. He pulled through, but it had a very high chance of not working.

[dragnet2]

Watch big Pharma in the next 15 years go into a tail spin, as millions of the well insured, who are insured enough to buy expensive medications and go to the doctor every week, who are now in their 70s 80s and 90s, all die off..

What's left?

Millions of part time workers with no health insurance, and millions more with near worthless health insurance. These people will no way have the money for all the health procedures and expensive medications they're parents were used to receiving..

Big Pharma nose dives in the next decade.