Liability premium shock is spreading, an AMNews exclusive survey shows

But physicians in Texas and Mississippi say they're a little better off today than they were in 2001.

By Tanya Albert & Jessica Diehl, AMNews staff. Jan. 31, 2005.

In 2001, a few physicians started whispering the term "liability crisis," but by the end of 2004 those whispers had turned into a chorus of shouts.

At least one company raised liability premiums 40% or more in 19 states in 2004, according to an AMNews analysis of data from state insurance departments, medical societies and insurance companies.

In 2001, 12 states had increases of that magnitude, according to the data.

Physicians in even more states feel the crunch today. The analysis showed that at least one company in 34 states raised rates 25% or more in 2004. That's nearly double the 18 states with that experience in 2001.

"In Illinois, OBs were paying $80,000 a year for insurance; now they are paying $147,000. In Florida, they were paying $166,000, and now they are paying $270,000. That shows that the landscape has changed," said American Medical Association President-elect J. Edward Hill, MD.

Higher premiums can have a big impact on physicians, who are often forced to cover the extra business cost without additional reimbursement. HMO contracts don't let physicians pass along the costs. And for years doctors have said that Medicaid and Medicare reimbursement rates are set at levels that don't cover overhead.

So, nearly four years since liability problems were first seen in Pennsylvania and West Virginia, more physicians in more states say they are factoring liability premiums into their practice decisions. The financial implications factor into deciding whether to continue practicing medicine in a particular state, whether to continue high-risk procedures and whether to become politically active.