Studies Indicates Tort Reform
Reduces PLI Premiums
Janaury 30, 2004 - Several recent studies focus on
the impact of professional liability insurance (PLI) on the
practice of medicine. These studies include reports in Health
Affairs and the New England Journal of Medicine, and by the
Congressional Budget Office (CBO).
The Jan. 21 Health Affairs study was conducted by
Kenneth Thorpe, Ph.D., chairman of the health policy and management
department at Emory University's Rollins School of Public
Health. According to Dr. Thorpe, PLI costs less in states
that limit damage awards. The study shows that damage awards
are responsible for at least part of the 23 percent increase
in PLI premiums in 2002. Overall, Dr. Thorpe found that premiums
are 17 percent lower in the 24 states that have some limit
on damages. According to the study, other factors contributing
to the 23 percent increase include declines in insurers' investment
income and a reduction in the number of insurers. In Dr. Thorpe's
study, the only malpractice reform that significantly predicted
premiums for physicians were damage caps.
The Jan. 8 CBO study [see Washington
Highlights, Jan. 16] added insight to Dr. Thorpe's
findings by showing that damage caps impact physicians' out
of pocket expenses, but not necessarily health care costs
overall. The CBO study supported Dr. Thorpe's findings by
showing that malpractice insurance premiums are lower in states
with restrictions on tort awards. However, the CBO study states
that savings on premiums do not necessarily lead to reduced
health care spending, noting "even large savings in premiums
can have only a small direct impact on healthcare spending
-- private or governmental -- because malpractice costs account
for less than 2 percent of that spending." The report
found that there is little evidence that caps on damages would
prevent widespread problems of access to care or reduce the
extent of costly "defensive medicine" by physicians.
The report also noted that there is no reason to conclude
that the current medical liability system acts as a deterrent
to medical errors because insurance premiums are based more
on location and medical specialty than on records of practice
styles.
The conclusions of both of these studies are echoed in
the Jan. 15 New England Journal of Medicine report
by David Studdert, LL.B., Sc.D., M.P.H., Michelle Mello,
J.D., Ph.D., and Troyen Brennan, M.D., J.D., M.P.H., which
discusses PLI reform efforts in the past and in the present.
The authors propose a number of possible solutions to the
current crisis in PLI that they say will prevent future
instability in the PLI market, including the establishment
of a compensation system that focuses on payment to an injured
party rather than blame. The authors conclude that reform
efforts should be focused on eliminating the adversarial
nature of PLI and eliminating the "haphazardness of compensation for patients
injured by medical care."
Information:
Richard Chard, Senior Research Associate
AAMC Division of Health Care Affairs
rchard@aamc.org
202-828-0297
Get Washington Highlights
in your Inbox!
|
