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Volume 27, Issue 471 |
July 10, 2006 |
MED-MAL CAPS HAVE ONLY “MODEST” EFFECT, STUDY FINDS
Rachel Burton
A comprehensive analysis of medical malpractice damage cap studies has found that such caps have had only modest effects on slowing doctors’ increasing malpractice insurance premiums, which now cost some specialists over $130,000 annually in states like Florida.
The analysis is a summary of all available peer-reviewed research on the effects of medical malpractice reforms, and was conducted by a Harvard professor of law and public health, Michelle Mello, for The Robert Wood Johnson Foundation.
Twenty-six states now cap the amount of non-economic damages—such as compensation for pain and suffering—that a wronged patient can receive in court awards (see map).
The analysis found that caps had no effect on premiums in the 1970s and 1980s, and had only a “modest” effect on premium increases in recent years, slowing the growth rate by 6 percent to 13 percent—although malpractice insurance premiums continue to increase in absolute terms.
While caps had only a small effect on doctors’ malpractice premiums, they reduced the average amount that patients won in damages by 23 to 31 percent. This drop in award amounts occurred despite the fact that fewer than 10 percent of malpractice cases go to trial, and only a few result in non-economic damages awards high enough to trigger the caps (which are typically $250,000 or higher). A “shadow effect” explains why even non-jury awards are lower in states with caps.
Mello argues that the current medical liability system is not an effective deterrent to medical malpractice, and works against efforts to get doctors participating in patient safety initiatives such as reporting of adverse events and “near misses.” She also notes that the system is inefficient—“only about 40 percent of the dollars spent on malpractice insurance go to injured patients.”
Rather than discouraging “frivolous” law suits, Mello found that caps “disproportionately burden the most severely injured patients.” She suggests that reformers consider less onerous ways to control malpractice costs, such as issuing standard schedules of non-economic damages in order to ensure more uniform damage awards, or setting up programs that encourage early disclosure of errors and “early offer” settlements.
A 2003 report by the General Accountability Office (GAO) found that malpractice liability premiums have increased because insurers have been paying out more in claims—although the GAO could not determine why; less investment income, due to falling bond interest rates (which make up roughly 80 percent of insurers’ investment portfolios); reduced competition in the malpractice insurance market; and rapid increases in reinsurance rates for insurers.
For NCSL resources on medical malpractice, click here.
Rachel Burton is an intern with the Forum for State Health Policy Leadership.
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