In brief
GAO: Claim losses lead to rate increases
The federal General Accounting Office (GAO) released a report recently citing insurance claim losses as the main culprit for nationwide increases of medical malpractice premiums, contradicting what many insurers have said.
Malpractice drives increases
The report looked at the largest insurance providers in seven states, and focused primarily on the specialties of obstetrics/gynecology, general surgery, and internal medicine. "Multiple factors, including falling investment income and rising reinsurance costs, have contributed to recent increases in premium rates in our sample states," the report stated. "However, GAO found that losses on medical malpractice claims, which make up the largest part of insurers’ costs, appear to be the primary driver of rate increases in the long run."
The report’s findings contradict the claims of tort reform opponents, stating that bonds — not stocks — make up about 80% of insurers’ investment portfolios, and that "almost no medical malpractice insurers experienced net losses on their investment portfolios" from 1998 through 2001.
Florida predicts savings from liability reform
After six months of negotiations and several special sessions, the Florida Legislature has approved a bill aimed at alleviating the state’s medical liability crisis. The bill, which passed the Senate by a vote of 32-4 and the House 87-26, caps noneconomic damages at $750,000 per claimant for hospitals and other health care facilities, and a total of $1.5 million in cases involving multiple claimants or facilities.
How will law be implemented?
For physicians, the legislation caps noneconomic damages at $500,000 with an aggregate cap of $1 million for all claimants. Florida Hospital Association (FHA) president Wayne NeSmith says the bill promises to alleviate much of the malpractice crisis for Florida health care providers.
"While FHA was disappointed that all of our proposed recommendations to solve the crisis were not adopted, our actuaries have projected savings from the noneconomic damage caps," he says. "We will have to wait and see how the law is implemented and whether physicians remain in Florida to practice medicine before we determine if the Legislature’s actions adequately addressed the medical liability crisis."
In addition to limiting noneconomic damages, the bill, which Gov. Jeb Bush is expected to sign into law, freezes liability insurance premiums until January 2004 and includes several patient safety-related provisions.
GAO: Claim losses lead to rate increases; Florida predicts savings from liability reform
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