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Wisconsin governor proposes raiding patient compensation fund

State lawmakers and physician groups say it is irresponsible to divert money that is earmarked for patients injured by medical malpractice.

By Tanya Albert, amednews staff. April 7, 2003.

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Physicians in Wisconsin fear that their low medical liability insurance rates are being jeopardized by the governor's plan to deal with the state budget deficit.

Wisconsin Gov. Jim Doyle has proposed taking $200 million from the state's Patient Compensation Fund to help offset a $454 million budget deficit. Physicians, hospitals and other health care professionals have paid into the fund annually for more than 25 years. The money is used to pay damages that exceed the coverage of medical liability insurance policies.

The governor says the fund has money to spare, but physicians and some lawmakers say it doesn't and that it would be irresponsible to use the money for other budget expenses.

"They are trying to plug a hole in one situation, but are creating a permanent problem in another area," said Mark L. Adams, general counsel for the Wisconsin Medical Society.

In addition to worrying that injured patients won't be fairly compensated, physicians and some lawmakers say that the fund, as part of extensive tort reform efforts in Wisconsin, has helped keep medical liability insurance rates low, even as they have soared in much of the rest of the country. Wisconsin is one of only six states that the AMA says is not showing signs of being in the midst of a medical liability crisis.

Adams said that the $200 million the governor wants to take would ultimately end up costing the fund $280 million, including lost interest income. The Wisconsin Medical Society also worries that taking the $200 million from the fund could result in a 50% increase in the fees that physicians pay into it next year.

"That increase would likely need to be continued for the next 25 years," WMS CEO-Executive Vice President John E. Patchett, said in a letter to members.

In 2001-2002, family physicians and other general practice physicians who don't perform surgery each contributed $1,518, according to state records. Obstetricians and neurologists each paid $9,110 and most other surgeons paid $6,302.

But Doyle defends his proposal. Dan Leistilow, spokesman for the governor, said taking the $200 million from the fund still leaves $400 million to pay injured patients.

"That leaves more than enough to cover any claim," he said. "And if it weren't, there is a provision that the state would make up the shortfall."

Doyle is proposing using the money to pay for Medicaid and other state health programs so the state doesn't have to follow Michigan, Missouri and Tennessee and cut services to residents who need such assistance.

"The question here is should we put these funds to use reducing health care costs for residents who need it or should we cut people off from health care services and have $600 million sitting in a fund?" Leistilow said.

Fight in the Legislature

It will be up to the state Legislature over the next couple of months to decide whether it will adopt the governor's proposal. So far, the idea hasn't been popular with Republican Sen. Dale W. Schultz who chairs the Committee on Agriculture, Financial Institutions and Insurance.

Schultz, who has been involved in insurance issues in the state for 20 years, said it would be fiscally unsound to take money from the fund. Although the fund shows a positive balance, the money is in place to pay future claims. Medical malpractice cases can take years to wind through the court system, and money paid into the system for a given year may not be paid out for several years.

Also, the law specifically earmarks the funds for medical malpractice plaintiffs. There has been discussion about the chances of possible lawsuits against the state if it tries to use the money for something else.

"We will leave this fund in total," Schultz said. "I'm sure of that. It will be up to the governor to understand we're just not going to do this."

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