GAO, in a Report Suppressed by Democrats, Finds Increased Insurer Losses Behind Malpractice Crisis

Findlaw PRNewswire ^ | July 29,2003

[hocndoc]

Jul. 29, 2003 Print This | Email This

GAO, in a Report Suppressed by Democrats, Finds Increased Insurer Losses Behind Malpractice Crisis

ROCKVILLE, Md., Jul. 29 /PRNewswire/ --

ROCKVILLE, Md., July 29 /PRNewswire/ -- In its report released July 28, the US General Accounting Office (GAO) completely substantiates the fact that increasing claim costs are the primary driver of the current medical liability insurance crisis. Dispelling the myths widely spread by trial lawyers and so- called consumer groups, such as the Foundation for Taxpayer and Consumer Rights, the GAO finds that medical malpractice insurers have not "experienced net losses on their investment portfolios," but have been required to significantly raise insurance rates due to rising claim costs, reduced investment income from interest on the bonds they hold, and increasing costs for the reinsurance they purchase.

"One of the greatest challenges we have faced during Congressional consideration of the medical liability crisis has been the flagrantly false information provided by the trial bar and their front groups to those who oppose effective federal health liability reform," says PIAA President Larry Smarr.

"For example, we constantly hear that stock market losses are responsible for the large increases in premiums doctors have to pay. But, like many other reputable sources, the GAO has correctly determined that insurers are 80% invested in bonds, and that declining interest rates explain premium increases of only 7.2% during 2000 - 2002, when insurance rates increased by double and even triple digit amounts across the nation. The GAO has undertaken a comprehensive review of the status of the industry, and has correctly documented the long-term rise in medical liability costs, fueled by ever- increasing jury awards and settlements," he added.

The GAO compared data collected from physician owned/operated insurers operating in seven states around the country, and found that the ratio of losses to premium income for 2001 exceeded 100% in all states except California, the only state in the group to have effective tort reforms as supported by President Bush and passed by the House of Representatives.

In an ironic paradox, the only Senator to request the GAO report, Senator Richard Durbin (D-IL), apparently had access to the report as early as its publication date of June 27, but failed to provide this accurate and timely information in early July during his leadership of the opposition floor debate of S11, the tort reform bill already passed by the House.

The report was finally released to the public yesterday by the GAO according to established procedure.

The PIAA is a trade association of over 50 physician- and dentist-owned and/or operated medical professional liability insurance companies and reinsurers. Collectively, PIAA members insure more than 242,000 physicians, 35,000 dentists, and 1,200 hospitals in the United States. For more information about programs and services of the PIAA, contact Lisa Cole, 301-947-9000, visit our website at www.thepiaa.org, or email lcole@thepiaa.org. Physician Insurers Association of America

CONTACT: Lisa Cole, Communications Director of the Physician Insurers Association of America, +1-301-947-9000, or lcole@thepiaa.org

Web site: http://www.thepiaa.org/

[hocndoc]

Just a little more info that is relevant to Proposition 12 in Texas' election this month.

[At _War_With_Liberals]

How does medical liability insurance compare to the insurance paid by other service type businesses as a % of net income?

[hocndoc]

hope you don't mind the ping. I'm trying to stick with those who seemed most interested in Prop 12 and medical malpractice

[hocndoc]

We pay all the other types of insurance, plus medical malpractice.
The percentage varies, and I can't remember reading about it that way.

I'd bet it's gone from 5 or 6% to 10% to 20%, just off the top of my head.

[MarkL]

I know that high risk malpractice insurance is out of control. The neurosurgeon who operated on my back (he's a neck and brain tumor specialist, so my lumbar vertebra was a walk in the park for him) told me that his malpractice premium was over $120,000 a year.

Mark

[hocndoc]

Here's another thread on med mal, with a great article from this week.
http://www.freerepublic.com/focus/news/974082/posts?page=11

[Eva]

I have a suggestion for tort reform. How 'bout if we require the the lawyers to put up a percentage of the proceeds (off the top) of a malpractice suit into an insurance pool to reduce the cost of malpractice insurance, on a sliding scale, the higher the payout, the more that goes back into the pool.

[At _War_With_Liberals]

Wow. Thats outrageous.

I would still like to know the insurance expense as a % of income, however. The cost is surely passed on to patients.

The cost of MMPI might be in line with other liability insurance as a % of income. I don't know for sure.

[At _War_With_Liberals]

"I'd bet it's gone from 5 or 6% to 10% to 20%, just off the top of my head"

Wow, thats a big jump...

[MeekOneGOP]

bumpity ! bumpity ! Thanks. Ah'll be back !! ...

[FreedomPoster]

We compared my wife's professional liability insurance (75 person CPA firm) with a friend's 4-doctor anesthesiology practice. I don't have the exact numbers, but the wife's practice pays an order of magnitude less than the docs, with an order of magnitude more professionals. So net-net, in this comparison, they're paying roughly two orders of magnitude more for medical malpractice than CPA malpractice.

[HoustonCurmudgeon]

hope you don't mind the ping. I'm trying to stick with those who seemed most interested in Prop 12 and medical malpractice

Not at all, thanks.

[Dianna]

The cost is surely passed on to patients.

Which patients? The medicare patients who they barely get reimbursed for or the HMO patients which have caps on all services?

I wonder how often Dr's renegotiate contracts with HMO's...

[BeerSwillr]

Thanks for the post. Quick read thru is interesting. Will return tonight to comment.

[MeekOneGOP]

ROCKVILLE, Md., July 29 /PRNewswire/ -- In its report released July 28, the US General Accounting Office (GAO) completely substantiates the fact that increasing claim costs are the primary driver of the current medical liability insurance crisis. Dispelling the myths widely spread by trial lawyers and so- called consumer groups, such as the Foundation for Taxpayer and Consumer Rights, the GAO finds that medical malpractice insurers have not "experienced net losses on their investment portfolios," but have been required to significantly raise insurance rates due to rising claim costs, reduced investment income from interest on the bonds they hold, and increasing costs for the reinsurance they purchase.

"One of the greatest challenges we have faced during Congressional consideration of the medical liability crisis has been the flagrantly false information provided by the trial bar and their front groups to those who oppose effective federal health liability reform," says PIAA President Larry Smarr.

I'm SHOCKED !! SHOCKED I tell ya !! < /sarcasm >

I'm voting FOR Texas Proposition 12 , btw ...

[therut]

As a physician let me explain how we just can't pass our overhead costs on to patients like other businesses pass on their costs. Yes we can charge whatever we want however Medicare and Medicaid is only going to pay a pre-set amount we have no say in this. Insurance companies vary on the % discount they demand. The only people who would pay our new increase in the charge would be those without insurance which means most do not pay anything. Another problem is we do not get to write off bad debt. If we could we would pay no income taxes. The amount of FREE medical care we provide is enormous. We are not a market driven business. That to me is the problem.

[hocndoc]

Thanks for the post, therut.

I wish there were some way of keeping track of bad debt and write offs (besides the ones we do on purpose and contractually) and to get tax credits for it.

Some of our docs tried to collect the info on the free care that we end up doing for the hospital due to ER call, etc. The numbers we were able to come up with surprised the city and county enough to ensure that some of the tobacco money went to indigent care instead of city coffers.

[BeerSwillr]

I've been thinking about prop 12 alot lately and I understand there is a problem, but I can't bring myself to vote any way other than NO.

It may make you feel good to vote other than NO, but doctors will see no improvments in their insurance rates.

I'll be over here ---> http://www.freerepublic.com/focus/f-news/972193/posts