Multiple Factors Behind Rising Malpractice Insurance Rates, GAO Says

"Multiple factors, including falling investment income, rising reinsurance costs" and losses on medical malpractice claims contribute to rising malpractice premium rates, according to a report released July 28 by the General Accounting Office (Highlights of GAO-03-702, June 2003). The report examines malpractice premium rates in California, Florida, Minnesota, Mississippi, Nevada, Pennsylvania and Texas. According to the report, "Losses on medical malpractice claims appear to be the primary driver of increased premium rates in the long term. Such losses are by far the largest component of insurer costs." Malpractice rate increases vary significantly from state to state and across medical specialties, the report says. For example, general surgeons in Florida faced a 75% rate increase between 1999 and 2002, while rates for general surgeons in Minnesota increased only 2% during the same period. Further, the report finds that insurance rates for OB/GYNs in Pennsylvania, which does not cap jury awards for noneconomic damages, increased by an average of 165% between 1999 and 2002, compared with an average 9% increase in California, which caps noneconomic jury awards. Successful malpractice claims against doctors and other providers increased 70.9% between 1998 and 2001 in Pennsylvania, according to the report. In addition, malpractice insurance rates for Pennsylvania surgeons and internal medicine physicians increased by 130% between 1999 and 2002 (Jakes Jordan Associated Press, 7/28). The report does not recommend any particular action but suggests that Congress "may wish to consider encouraging" the National Association of Insurance Commissioners, as well as state regulators, to identify and collect data on malpractice insurance rates (Highlights of GAO-03-702, June 2003). The report is available online.

Most Support 'Reasonable' Reform
Recent polls show that 72% of individuals support a "reasonable cap" on noneconomic damages in medical malpractice lawsuits and want "reasonable liability reforms," American Medical Association President Donald Palmisano writes in a letter to the editor of the Washington Post. He notes that trial lawyers "pretend that the quarter-million dollar cap [in House and Senate bills] would be an overall cap, instead of just a cap on subjective noneconomic damages, with patients still able to collect unlimited amounts for actual economic losses," concluding that his group "will continue to clarify that point so the truth about the reforms we support is clear" (Palmisano, Washington Post, 7/29).