Tax break on liability insurance proposed

Medical groups say the bill is flawed because it doesn't address the underlying causes of escalating premiums.

By Tanya Albert, amednews staff. June 2/9, 2003.

One U.S. senator wants to let you write off part of those high medical liability premiums on your next two federal tax filings.

Under the bill offered in May by Sen. Dick Durbin (D, Ill.), the size of the deduction would vary by specialty. Family physicians, internists, allergists, dermatologists, pathologists and other physicians in general medicine would be able to deduct 10% of their liability insurance premiums from their 2003 and 2004 taxes.

Surgeons, obstetricians, anesthesiologists, neurologists and emergency physicians would be allowed to write off 20% of their cost. Hospitals and clinics could deduct 15%.

Durbin said the bill would provide physicians immediate relief while lawmakers debated a more comprehensive solution. "Even if all the tort reforms they proposed were to pass this year, doctors would not see a decrease in their premiums for three to four years," he said.

Groups pushing for comprehensive federal tort reform said they appreciate Durbin's attempt to help physicians who are facing high medical liability insurance premiums. The AMA has declared 18 states to be in the midst of a medical liability crisis that has physicians retiring early, cutting back on high-risk services or moving to other states because they can't find affordable insurance.

But the Association and others said the bill doesn't do enough.

The bill would allow a 10% to 20% deduction of premium costs.

"It doesn't address the underlying causes of the problem of escalating cost," said AMA Chair J. Edward Hill, MD. "It subsidizes the cost, but it doesn't address the reasons why the cost is escalating."

The bill is dangerous, said Richard E. Anderson, MD, chair of the Doctors Company, which sells medical liability insurance for physicians.

"It's like treating SARS with aspirin," he said. "It will lower the fever, but it won't cure the disease."

The legislation has three shortcomings, said John Thomas, chair of the Coalition for Affordable and Reliable Health Care, a national organization of hospitals, long-term care companies, businesses, health care professionals and citizens that supports tort reform. It does nothing to reduce medical liability costs. It takes the heat off of personal injury lawyers who, he said, create a medical liability problem by filing frivolous lawsuits. And it increases the taxpayer burden.

"Taxpayers should not subsidize greedy lawyers and a broken system," Thomas added.

Insurers, the AMA and other medical groups have pushed for tort reform that would cap noneconomic damages awarded in medical malpractice lawsuits at $250,000.

That legislation -- the Help Efficient, Accessible, Low-cost, Timely Healthcare Act of 2003 -- also would hold physicians responsible for only their portion of damages and impose a three-year statute of limitations on when most medical malpractice cases could be filed.

The House passed the legislation earlier this year, with Republicans generally supporting the bill and Democrats generally voting against it. Democrats and trial lawyers oppose a cap on noneconomic damages. The narrowly Republican-controlled Senate has yet to take action on a bill. While there are likely more than the 50 votes needed to pass a Senate bill with a $250,000 cap, there are not the 60 votes needed to stop a filibuster.

Weblink

Thomas, the federal legislative information service, for bill summary, status and full text of the liability insurance tax credit bill (S 1055) (thomas.loc.gov)