Caps on Damages Won’t Cut Malpractice Premiums

A young woman has a perfectly normal breast removed unnecessarily and a baby is born severely brain damaged because a doctor was having sex with a hospital nurse. Is it true, as claimed, that medical malpractice claims and lawsuits in recent years have increased, resulting in high malpractice insurance premiums and reduced access to health care?

In the last five years in Illinois, there has been no increase in the number of medical malpractice lawsuits filed. In 2004, the total amount that ISMIE, the malpractice insurer for doctors, paid to settle claims was 10 percent less than in 2003. The average amount ISMIE paid on a claim in 2004 was 20 percent less than in 2003. In 2004, ISMIE took in almost $200 million more than the amount it paid out in claims.

Placing caps on damages will not lower malpractice premiums. Premiums continued to rise in every state after caps were enacted. And some states without caps (like Iowa and Minnesota) have some of the lowest malpractice premiums in the country.

Caps on damages are no cure for physician shortage problems. In 2001, were there have been caps for 20 years, the California Medical Association found that 43 percent of doctors planned to leave medical practice in the next three years.

The real problem lies with the insurance industry. In 30 years, no rate increase by a medical malpractice insurer has ever been rejected by Illinois regulators because they have no authority to reject a rate increase.

So does it make sense to pass a cap on the recovery of the most severely injured patients when it won’t solve the malpractice premium problem, or does it make sense to pass laws not to reduce medical malpractice so there are less malpractice cases and to reduce doctors’ malpractice premiums by toughening insurance regulation? The answer is obvious if you look at the facts.