GAO: Liability hike fueled by awards
Falling investment income and rising reinsurance costs play a role.
By Tanya Albert, amednews staff. Aug. 18, 2003.
Several factors are pushing up medical liability insurance rates, but insurance losses on medical malpractice claims seem to be the primary driver, says a new government report.
The General Accounting Office study says falling investment income and rising reinsurance costs also have contributed to rising rates. The office based its findings on research conducted in California, Florida, Minnesota, Mississippi, Nevada, Pennsylvania and Texas.
Weeks after a tort reform bill that included a $250,000 cap on noneconomic damage awards failed to pass in the Senate, people on both sides of the debate claimed that the GAO report bolsters their positions.
The study puts to rest "trial lawyer smokescreens" that insurance company gouging and stock market losses led to the problems, said AMA President Donald J. Palmisano, MD. "Today's report makes clear that bonds make up 80% of insurers' investments and that no medical malpractice insurers experienced a net loss on their investment portfolios," he said.
But Rep. John Conyers Jr. (D, Mich.), the ranking member of the House Judiciary Committee, said the study clearly indicates that caps on noneconomic damages won't solve the problem. For example, the report showed that Minnesota, with no caps on noneconomic damages, saw the smallest increase in losses.
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