After years of relative stability, medical malpractice premiums are soaring across the US, forcing thousands of physicians to “go bare,” shut their offices, relocate or accept double-digit increases.
In New York, Texas and Florida, where litigation is most rampant, insurers are increasing their rates by 30% to 50%. In southeast Florida, higher-risk specialists such as obstetricians are now paying $200 000 a year for $1 million in coverage. Neurosurgeons in Long Island, NY, who are already paying $150 000 annually for $1 million in coverage, have already been told they will be paying even more. In Corpus Christi, Tex., a pediatric neurosurgeon saw his premium increase from $32 000 in 1999 to nearly $120 000 last year.
Not only is insurance becoming unaffordable, it is also becoming unavailable in some regions. Three insurers have recently stopped insuring physicians. St. Paul Companies of Minnesota has refused to renew policies for 42 000 doctors spread across the country. PHICO insurance company liquidated, leaving hundreds of Vermont physicians uninsured. And the Princeton Insurance Company opted out of the medical liability market in Pennsylvania, leaving more than 1000 physicians scrambling for coverage.
The American Medical Association (AMA) says 14 of 16 neurosurgeons in Broward County, Fla., now practise without insurance either because they could not find it or afford it. In Las Vegas, 10% of practising MDs are expected to leave in the face of escalating premiums. Dr. Donald Palmisano, the AMA's secretary treasurer, has heard from many physicians faced with “difficult decisions to limit services and in some cases retire early or leave the state. We are also hearing … that the liability lottery is negatively affecting patient access to care.”
A major factor is the cost of litigation. For every dollar collected in premiums from Nevada doctors, St. Paul insurance lost $1.88. And even though the number of malpractice cases litigated has been relatively stable, average jury awards are rising once again. Jury Verdict Research, a firm that analyzes such trends, found that the median jury award in 1999 was $800 000, up 7% over the previous year. But when all awards, including the most catastrophic ones, are tallied, the average 1999 award came to $3.49 million, up from $1.95 million 6 years ago.
Another critical factor is that during the 1990s a soaring stock market allowed insurance companies to subsidize their malpractice business by investing heavily in a soaring stock market. When that bounty dried up, insurers went back to their MD clients to help cover losses.
To a degree, Canadian physicians are insulated from similar pressures. Dr. John Gray, CEO of the nonprofit Canadian Medical Protective Association, says the CMPA raises fees only to cover the cost of awards. However, these fees represent only half of its revenue — the rest comes from investments made possible by the organization's huge war chest. In this respect, adds Gray, the CMPA is not insulated from the market performance of its investments.
In Canada, Ontario obstetricians pay the highest annual fees — $69 360. (The province pays almost all of this because of an agreement with the Ontario Medical Association.) An obstetrician in Quebec pays only $15 199, mainly because court awards are less generous there. — Milan Korcok, Florida