Thursday, June 5, 2003

Damage caps don't curb premiums

By Tim Bonfield
The Cincinnati Enquirer

Years of political battles to persuade states to limit damages from medical malpractice claims have not reduced insurance premiums for doctors, according to a national insurance industry rating company.Instead, insurers enjoyed lower payouts for claims without passing on the benefits to doctors, according to a report issued Monday by Weiss Ratings Inc.

"Tort reform has failed to address the problem of surging medical malpractice premiums," said Martin Weiss, chairman of Weiss Ratings. "The escalating medical malpractice crisis will not be resolved until the industry and regulators address the other, apparently more powerful, factors driving premiums higher."

The report compared malpractice rate trends in 19 states that adopted damage caps since 1991 to 32 states that had not. Ohio had not passed tort reform during the study period. Among the findings:

• In states with caps, doctors witnessed an average 48.2 percent increase in malpractice premiums from 1991 to 2002, compared with a 35.9 percent increase in states that had no limits on damages.

• Insurers did see slower payouts in states with damage caps. Payouts for malpractice claims grew by 83.3 percent in states with caps, compared with 127.9 percent in states without caps.

As a result of these findings, Weiss said legislators should put all proposals for punitive damage caps on hold until they can be shown to reduce costs for doctors. Weiss also said doctors should do a better job of policing themselves and that insurers shouldn't let market competition get in the way of setting rates that reflect actual risk.

Rather than higher jury awards, the Weiss report blames rising malpractice rates on weak reserves set aside by insurers, caused by years of underpricing as insurers competed for market share, combined with rising costs of medical inflation and weak investment income.

"The only way to shore up reserves is to increase premiums," Weiss said.

The Weiss report surprised some who expect doctors to benefit now that Ohio has adopted malpractice damage caps. In January, Gov. Bob Taft signed a bill that aims to limit non-economic malpractice damages to $350,000 in most cases.

The Weiss report yields "an interesting finding," but "is certainly inconsistent with previous reports on this subject matter," said Tim Maglione, lobbyist for the Ohio State Medical Association. "All the information we have seen indicates that states with caps have seen slower rates of increase than states without caps."


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