Special Update on Medical Liability Crisis

09/01/2002

U.S. Department of Health and Human Services

Special Update on Medical Liability Crisis

U.S. Department of Health and Human ServicesOffice of the Assistant Secretary for Planning and Evaluation

September 25, 2002


This paper was prepared by the Office of Disability, Aging and Long-Term Care Policy within the U.S. Department of Health and Human Services. For additional information, you may visit the DALTCP home page at http://aspe.hhs.gov/daltcp/home.htm or contact the office at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. The e-mail address is: webmaster.DALTCP@hhs.gov.


On September 24, 2002, Medical Liability Monitor (MLM), an independent reporting service which tracks medical professional liability trends and issues, released preliminary results of the MLM’s annual rate survey. This survey determined that the crisis in medical malpractice liability insurance identified in HHS’s report entitled, “Confronting the New Health Care Crisis: Improving Health Care Quality by Fixing Our Medical Liability System,” has worsened in 2002.

Insurance Premiums Have Risen More Rapidly in 2002

The cost of the excesses of the litigation system are reflected in the rapid increases in the cost of malpractice insurance coverage. Premiums are spiking across all specialties in 2002. When viewed alongside previous double-digit increases in 2000 and 2001, the new information further demonstrates that the litigation system is threatening health care quality for all Americans as well as raising the costs of health care for all Americans.

TABLE 1. Medical Malpractice Liability Average Premium Increases by Specialty(Date is When Survey Was Taken, Compared to Previous Rates)
Specialty   July 2000    July 2001    December 2001    Summer 2002  
Internists 17% 10% 22% 26.3%*
General Surgeons 14% 10% 21% 23.7%*
Obstetricians/Gynecologists  12% 9% 19% 19.4%*
Source: Medical Liability Monitor* preliminary data

The data in Table 1 reflect an average of specialties in all states. Averaging disguises the different experience in states that have reformed their litigation systems and those that have not.

Rates Are Rising Fastest In States Without Reasonable Limits on Non-Economic Damages

As reported in “Confronting the New Health Care Crisis: Improving Health Care Quality by Fixing Our Medical Liability System,” 2001 premium increases in states without litigation reform ranged from 30%-75%. In 2002, the situation has deteriorated. States without reasonable limits on non-economic damages have experienced the largest increases by far, with increases of between 36%-113% in 2002. States with reasonable limits on non-economic damages have not experienced the same rate spiking.

TABLE 2. Premium Increases in Non-Reform States*
State Premium Increasein 2002
Arkansas 112%
Connecticut 40%
Florida 75%
Georgia 40%
Maryland 37%
Mississippi 99%
Nebraska 36%
Nevada 50%
New Hampshire 50%
North Carolina 50%
Ohio 60%
Oregon 80%
Pennsylvania 40%
South Carolina 42%
Tennessee 65%
Texas 40%
Virginia 113%
Wyoming 38%
Source: Medical Liability Monitor, 2002.*Highest increase among specialty physicians as reported in MLM Survey, 2002.

The July HHS report identified 10 non-reform states that had significant premium increases in 2001 for three key physician specialists. Here is how those states fared in 2002.

TABLE 3. Average Highest Premium Increases in Non- Reform States
State 2002 AverageHighest Premium Increase
Arkansas 64%
Oregon 41%
Pennsylvania 40%
Ohio 35%
Georgia 29%
Nevada 26%
Connecticut 24%
New Jersey 15%
West Virginia 13%
Washington 7%
Source: Medical Liability Monitor 2002 Report. Average highest premium increase reported for internal medicine, general surgery and ob-gyn physicians.

The most recent data from MLM indicate that physicians in additional states without reasonable limits on non-economic damages are now facing similarly substantial premium increases. These new states in crisis appear in the table below.

TABLE 4. New States in Crisis
State 2002 AverageHighest Premium Increase
Virginia 66%
Mississippi 54%
Florida 48%
New Hampshire 44%
Tennessee 40%
South Carolina 37%
North Carolina 32%
Colorado 23%
Nebraska 23%
Iowa 22%
Source: Medical Liability Monitor 2002 Report, September 24, 2002 (preliminary data). Average highest premium increase reported for internal medicine, general surgery and ob-gyn physicians.

Physician Premiums Are Lower in States That Have Reformed Their Litigation System

A comparison of the range of physician premiums, by specialty, in states that have not reformed their litigation system, to California, which has implemented reasonable caps on non-economic damages, reveals how excessive awards for non-economic damages affect premiums.

  TABLE 5. States with High Annual Premiums in 2002 by Specialty, Compared to California 
State OB/GYNs Surgeons Internists
Florida $211K-$78K $124K-$36K $56K-$15K
Nevada $142K-$59K $85K-$38K $17K-$11K
Michigan $141K-$50K $107K-$43K $46K-$14K
New York $115K-$33K $66K-$19K $17K-$6K
Illinois $102K-47K $70K-$32K $26K-9K
Texas $98K-$42K $71K-$31K $26K-$10K
Maryland $96K-$30K $45K-$24K $11K-$6K
West Virginia $95K-$69K $64K-$40K $18K-$9K
Connecticut $95K-$69K $43K-$37K $14K-$7K
District of Columbia $90K-$84K $43K-$38K $13K-$11K
California $72K-$20K $49K-$17K $12K-$5K
Source: Medical Liability Monitor 2002 Report, September 24, 2002 (preliminary data). Average highest premium increase reported for internal medicine, general surgery and ob-gyn physicians.

Impact of Year-After-Year Rate Increases in Select Crisis States

The recent data demonstrate the cumulative impact of year-after-year increases in premiums. In the 9 states which the American Medical Association deemed to be in a crisis, the Medical Liability Monitor compared the rate increases of 2001 and 2002. The results are clear:

  TABLE 6. Highest Rate Increase for OB/GYNs in AMA Crisis States Compared to California 1998-2002
State 1998 Rate 2002 Rate IncreaseSince 1998
Washington $38,882 $51,878 33.4%
Georgia $39,732 $48,973 23.2%
Nevada (Clark Co.) $94,824 $141,760 49.5%
Florida $147,875 $210,576 42.4%
Mississippi $37,296 $45,125 21%
Ohio $61,364 $152,49 148.5%
Oregon $21,680 $48,942 126%
Pennsylvania $25,548 $64,314 125.3%
West Virginia $84,551 $97,790 30.4%
Source: Medical Liability Monitor 2002 Report, September 24, 2002 (preliminary data). Average highest premium increase reported for internal medicine, general surgery and ob-gyn physicians.

Continuing and accelerating increases in insurance means more doctors are confronted with premiums they cannot afford to pay. More doctors will retire early, reduce their practice to patients who present less risk of litigation, or move to states that have reformed their litigation system. This reduces Americans’ access to quality care and increases the cost of care paid by all Americans. The litigation crisis is only getting worse.

With few exceptions, average premiums for states with reasonable limits on non-economic damages are lower than for the US as a whole. This holds true for all three specialties.

TABLE 8. Average Premiums for Internists, General Surgeons and Obstetrician/Gynecologists2002
State Internists General Surgeons Ob-Gyns
Indiana $4,023 $14,574 $19,486
South Dakota $4,150 $13,853 $18,633
North Dakota $6,609 $16,238 $24,971
Hawaii $7,156 $25,756 $42,928
Montana $7,334 $26,775 $40,693
Utah $9,244 $37,299 $45,588
New Mexico $7,802 $35,915 $35,915
California $10,098 $28,693 $48,704
Michigan $26,146 $71,713 $88,945
Total US $12,355 $36,564 $49,530
Source: Medical Liability Monitor 2002 Report, September 24, 2002 (preliminary data).

For more information on this subject, go to the Office of Disability, Aging and Long-Term Care website at http://aspe.hhs.gov/daltcp/reports.htm.