Caps won't solve 'insurance crisis'

We are in an insurance crisis. This crisis affects doctors, who have seen their medical malpractice insurance rates skyrocket during the last two years. It affects businesses that now pay nearly twice the premium for the same comprehensive loss coverage purchased two years ago. It also affects homeowners. Recently, one insurance agency announced a plan to raise its homeowner rates in Florida by as much as 85 percent over the next two years.

Insurance policyholders are being price-gouged across the board. Because the insurance companies are exempt from anti-trust laws, they are free to organize outrageous rate hikes or orchestrate walkouts without punishment. As a result, if health-care organizations wants to affect substantial and lasting reduction in their premiums, they must first admit that the insurance industry, not their patients, is the cause of this crisis.

Insurance companies make their money during years of economic growth. When the economy is good, insurance companies fiercely compete for premium dollars to invest. During the good economic times of the 1990s, insurers cut their rates in order to attract new business. In fact, doctors actually experienced a reduction in their medical malpractice premiums as more and more insurers flooded the state to compete for these premium dollars.

In their quest for the all-mighty dollar, the insurers engaged in severe under-pricing and questionable business practices by insuring doctors they knew had multiple prior claims. In 2000, when the economy turned with a vengeance, many of these fly-by-night insurance companies realized too late that they had charged too little and insured some of the worst doctors in Florida. As a result, their losses began to escalate. As the economy worsened in 2001, the insurance industry responded as it always has, by raising rates.

And then, Sept. 11, 2001 occurred. This tragedy was followed by revelations of fraud and corruption at Enron, WorldCom, ImClone and many others. How did the insurance industry respond to these events? Lloyd's of London, in a newsletter to its members just after Sept. 11, stated that those terrorist attacks were a "historic opportunity" to make money, adding that premiums "had shot up to a level where very large profits are possible." In response to Enron, insurers increased their rates for reputable companies by 50 percent to 300 percent. Tragedy, it seems, is just an insurer's word for "opportunity."

And so now we find ourselves in the midst of this debate on medical malpractice. Insurance insists that there is a "crisis" caused by an explosion in litigation. It argues that the only way to keep medical malpractice premiums down is to impose restrictions on the damages that can be recovered by someone injured through medical carelessness. This is the same argument we have heard each time we have suffered an economic downturn, such as in the mid 1970s and 1980s. Each time, insurance companies have taken advantage of the problem they created by asking for (and receiving) restrictions on the ability to bring a claim for medical carelessness. However, there is no litigation explosion. And there never has been.

According to the Florida Department of Insurance's "closed claims" database, the number of medical malpractice claims per capita has gone down since 1991. The reality is that attorneys who specialize in medical malpractice claims do not pursue frivolous claims. These cases are extremely complex, challenging, time-consuming and extraordinarily expensive.

In Florida, before being able to file a medical negligence suit, you must have a sworn affidavit from a doctor that the case has merit. Thereafter, it will cost you $25,000 to $100,000 or more in costs to bring that case to trial. Even when a claim has merit, juries are typically inclined to side with the medical professionals and rule in their favor 75 percent of the time. When the jury does rule in the patient's favor, the Florida Department of Insurance reports that the average pay-out to victims of medical carelessness has gone down by more than 14 percent since 1991 when adjusted for inflation.

And yet, in spite of all of this evidence from the Department of Insurance, insurers are still campaigning for a restriction on patients' rights. The centerpiece of the insurance industry's proposed legislation is a $250,000 cap on non-economic damages, otherwise known as pain and suffering or "loss of quality of life."

California passed a $250,000 cap on these damages in 1975, and it has never been increased. In 1975, $250,000 was worth $877,000 in 2002 dollars. With each successive year, the $250,000 is worth less and less due to inflation. This fact, standing alone, demonstrates the unreasonableness of an absolute cap on damages.

Finally, independent studies have shown that caps on non-economic damages in medical malpractice claims do not prevent premium increases. On June 3, 2003, Martin Weiss, chairman of Weiss Ratings, Inc. (www.weissratings.com), an independent agency that rates insurance carriers, concluded that although caps slow the increases in amounts paid out by the insurance carriers, most insurers have not passed on those savings to the physicians due to other pressures, such as the decline in investment income. The report concludes that caps have been ineffective in reducing medical malpractice premiums for medical professionals.

What is the solution to the insurance crisis? First, we must insist that insurance companies open their books for inspection and prove that they are losing money and if so, the cause of that loss. In this age of accounting fraud and scandal, it's absurd to simply take the insurance industry at its word without demanding some proof.

Second, unless legislation is passed mandating rate roll backs, the doctors must create self-owned mutual insurance companies, in which the doctors are members-owners. Any profit earned by the mutual company is returned to the doctors as premium reimbursement. Chiropractors and lawyers have successfully used the mutual insurance companies for years.

Third, the medical profession must stop their attempts to extort patients and the Legislature by orchestrating walkouts. Instead, the medical profession must assume more responsibility for policing itself and removing the multiple offenders from its ranks.

Relative to the amount I pay for insurance and the services I receive from the companies that I pay to, I pay next to nothing on taxes (remember, I use government services all the time, I imagine you do to).

Ah! Government "services." And you pay next to nothing "on" taxes, and "use government services all the time." And you want me to keep providing for you. Excuse me, if I would rather not.

And as for your imagination, actually I use very few, if any, government services that did not exist back in the 50's when the normal American family paid very little of its income to the Federal Government. There was virtually no medical insurance in the 50's either, because lawyers hadn't come up with medical malpractice suits yet.

ML/NJ

The insurance companies and defense bar have done a great job spinning the famous McDonald's spilled coffee case.

Oh, please!

Let me guess: you're a lawyer and you think Joint and Several Liability is a great thing?

Who spun the AT&T Phonebooth suit, the tobacco suits, the asbestos suits, the implant suits, the gun manufacturer suits, etc.? The people who bring these sorts of suits belong in jail, not in fancy Park Avenue apartments.

ML/NJ

Bovine Scattalogy. Caps do nothing.

You post provides just as much evidence as the initial article which is none. I have cited a growing industry which was destroyed by insane liability suits, and would likely still be with us had reasonable negligence caps been in place.

ML/NJ

The one sure-fire way to hold down malpractice costs is simple: Don't sue!

I had open heart surgery two weeks ago. Some dimbulb from the IV team relocated my IV while I was zonked on drugs. When I woke up, my right hand was burning and the bed felt wet. They were having real problems finding veins to use and Miss Dimbulb plumbed a lot of real estate in my arm and hand to find something viable. In haste, no doubt, she left a needle in a dry hole accidently and went onto greener pastures.

That dry hole turned out to be a gusher and bled for only God knows how long. Under the influence of the drugs, I assumed I had near bled to death. A nurse's aide was in the room and witnessed my rude awakening. The panic took my breath away, literally, and I dragged myself to the bathroom to see if I could yank the needle out as trussed up as I was.

Sure, I was pissed. And annoyed. The staff went into crisis mode to stop the bleeding and see to my safety. This could have been the one. The lawsuit they settled that might have paid off the house. What I asked for, and received, was an explanation of how it happened, what they would to do prevent it happening again, and an apology.

End of incident. No need to sue anyone for anything. I did my part to keep the cost of the next operation I might need down.

Let's keep spinning the coffee case, counselor.

The old bat parked the hot stuff between her knees

She was being driven, was a passenger at the time. Shouldn't she have sued the driver? Guess what, the driver was a family member. No deep pockets.

Anyone parking hot coffee between her knees in a moving car needs a KEEPER, not caffeine. Making it MacDonald's fault was a travesty, however hot they make their coffee.

"and would likely still be with us had reasonable negligence caps been in place."

So you think it's totally legit to assign a dollar value to your son? Your daughter? You can't handle the marketplace regulating itself obviously. And since government has declined to accept the responsibility which it created for itself of monitoring the investments of the insurers, now the government wants the power to impose valuations on human life. Yeah, sounds real "progressive" to me. What's next? Shall we have government assign our health care providers also, so the bad doctors who do not get as many customers get clients assigned to them to "even out the workload". It's people like you, who think a government solution to every problem is the cure (apparently) who have brought this system down. Don't blame the lawyers. Don't blame the doctors. Blame the lazy, incompetent, selfish voter who wants cradle to grave b*tt k*ssing by Big Brother.

The reality of this problem is not just assinine lawsuits. The problem is the lack of prosecution by state governments of criminal and/or incompetent people who should not be in medicine AND criminal and/or incompetent lawyers. But since you prefer to assign dollar valuations to human life, I guess we'll just wait and see what happens. Who knows, maybe we'll just do what we are doing as a nation now; increase the socialization of the American economy. After all, you and so many others (dissappointingly) seem to be endorsing the Eurosocialisation of America.

Uh, do you use ATC? OK, think about paying for it next time you need one of their "unnecessary" services. Unless, of course, you lost your medical awhile ago. As for paying next to nothing, I said relative to what I pay. I think you should gain some thicker skin and try not to be so sensitive if you're going to debate these issues.

I would usually agree with you but in the case of ridiculously high liability awards there is no market force that is at play. Juries use facts and judgment to find for guilt or innocence. However, in many of the ridiculously high jury awards emotion overrules reason. Every human being is precious and no you cannot put a price on certain things. However, people do make mistakes and sometimes bad accidents happen and the law does assign blame on certain parties. Victims should be compensated but defendants should not be punished more harshly than the offense requires to "send a message". Even murderers are protected in this country against cruel and unusual punishment after all.
I agree that insurance companies are very powerful in the US. But I also know from their stock price that they're not doing well at all. Lawyers on the other hand are doing extremely well. Just like the stock market is a great way to know that insurance companies are not doing well, the number of people attracted to the law profession is a great indication about the level of compensation in that industry. I'd therefore love to see reforms in that profession first.

I beg your pardon? Very little of its income? You do realize that the very progressive tax structure from the Roosevelt years was still in place.

A vigorous and growing investment in the engines of economic development is the key to maintaining low insurance rates.

That's about the only way for insurance companies to make a return, in the low interest rate environment. When you pay low house payments after refinancing your mortgage, it has to come back out of you in some other way.

I think it might be a fair trade, many hundreds of dollars less in mortgage payments (if interest rates were in the ten percent range) than a couple hundred dollars in extra premiums.

Uh, do you use ATC? OK, think about paying for it next time you need one of their "unnecessary" services. Unless, of course, you lost your medical awhile ago.

Actually I don't use ATC anymore, because I don't fly anymore. The costs (some of which I've alluded to here) just outweigh the benefits to me. And no, I didn't lose my medical; but what if I had. Why would that be relevant?

But I did use ATC when I flew. (I almost always flew IFR when I was going someplace.) My understanding is that I paid for it as part of the tax on aviation fuel. Funny how all the things I use I seem to pay for, isn't it. I use roads too. Is that okay with you?

And BTW, I'm not sure how much you know about ATC, but they "used" us too. My instrument instructor worked NY Center and he taught me a lot of things you obviously never learned.

ML/NJ

I beg your pardon? Very little of its income? You do realize that the very progressive tax structure from the Roosevelt years was still in place.

Yeah, I do. But the inflation rates beginning around 1965 pushed average wage earners into higher and higher tax brackets. The Social Security maximum was under $400 each for employer and employee when I started working fulltime back in 1968. If a dollar back then was worth five now, that would translate to $2000. But this year's maximum is $6655. And now families usually have two wage earners, as opposed to one 35 years ago, so that maximum might be realistically increased.

ML/NJ

This is one area where the Brits "Have It Right"!

We allow jury trials for lawsuits in which EMOTION and WEALTH ENVY play the primary role! It is totally a matter of THEATRE if you have ever observed a trial in which PUNITIVE DAMAGES are sought!!!

"Yes your Honor, I was drunk but "they" never should have let me (fill in the blank)". After the tearful display, the jury (fantasizing how much they would like to receive a "windfall) awarded a gazillion dollars to X! What a sham!

Damages should always be assessed and awarded on a dispassionate basis. As I understand it, the Brits utilize a 3 Judge panel to do so. Why do you think the trial lawyers are the big supporter of the Dems???

When you reform the legal profession without the medical and insurance professions receving the same overhauls, you invite disaster. I predict socialized medicine within 5 to 10 years and a decline in the quality of medical care. Regardless of the outcome of the tort reform efforts. All tort reform will do is result in lower quality lawyers (to get the $250K) against lower quality doctors with the same insurance rates as we have now.

The American public always takes the easy yet wrong way out in this day and age. Hillarycare is on the way.

Damages should always be assessed and awarded on a dispassionate basis. As I understand it, the Brits utilize a 3 Judge panel to do so.

This is what America needs. And, in any case where a company is being sued by an individual, how can a company possibly be getting a jury of their peers? Or, if a doctor is being sued, what would be a jury of the doctor's peers? It seems the individual filing suit will always appeal more to the jury....(or, as I was told, jury = 12 people who weren't smart enough to avoid jury duty or had nothing better to do)

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