South Florida Hospital News
Sunday May 26, 2019
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May 2010 - Volume 6 - Issue 11

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Malpractice Insurance Expert Advice from Danna Gracey

Thoughts on Healthcare Reforms and the Malpractice Insurance Market

Tort reform was completely taken off the table early in the healthcare reform debate not just because of the Democratic Party’s deep connection with the plaintiff bar, but also because of our temporarily low malpractice insurance rates. We did not hear such a hue and cry from doctors about the lack of tort reform because malpractice insurance rates have fallen steadily for most specialties across the country for some years now. Florida doctors’ comfort levels with malpractice insurance rates have increased greatly as rates have dropped by over 50% for many doctors in the five years since tort reforms of 2003 and 2004. Doctors in California have experienced stable rates for years because of their MICRA reforms that are a model for the nation, and Texas physicians are basking in severely decreased rates because their tort reforms were even better than those in Florida. The problem is many malpractice industry leaders believe that rates cannot continue to decrease much longer and some are even predicting higher rates and stricter underwriting of doctors’ risks in Florida within just a few years, given just the normal market cycles.

The hardening of the malpractice marketplace could happen even faster if Florida’s Supreme Court overturns our tort reforms, as many forecast. In fact, we could even be headed into another malpractice crisis if tort reform is overturned in Florida. With a few cases now working their way through the court system, timing is looking troubling. Here is a possible scenario to consider: Our tort reform gets overturned in a year or two, just about the time the Florida malpractice insurers are making less and less profit due to increased competition. Some insurers, particularly newer, price-only driven carriers, already are operating on such thin margins that any further pricing reductions will make them even more financially fragile. If tort reform is overturned we will very quickly see a dramatic increase in malpractice cases filed against doctors, and of course, malpractice insurance rates will spike correspondingly, since there will be no excess profit margins, or serious investment returns, to hold rates down against the rising tide of claims. Unfortunately, this could all unfold just about the time physicians might well be making less money due to possible Medicare cuts, healthcare reforms, and higher taxes on "high income" individuals like doctors to help pay for the healthcare reform costs. As doctors’ incomes go down, more and more doctors may determine that the increasing expense of malpractice insurance is unaffordable, and just decide to go bare, which many of their uninsured Florida peers have been telling them to do anyway. More doctors going bare means even higher rates for insured doctors as the insured doctors will carry the burden of risks for the uninsured, just like insured patients ultimately pay for the uninsured patients’ care.

So, as we head into another possibly very difficult time in malpractice insurance, physicians need to consider how important tort reform is to the financial health of their practices even as malpractice rates decrease further in the short term. If we don’t fix our medical malpractice tort laws in this round of healthcare reforms, and those reforms create even more problems, as many predict, then maybe national medical tort reform will happen some years from now when the system is even more broken than it is now and the politicians and the public are ready for and demand serious solutions to a real crisis.

For now, Congress and the President seem proud to have passed a healthcare reform bill that offers no tort reform, does not address the $100 billion to $200 billion per year in estimated defensive medicine costs due to doctors’ fear of being sued, will increase income taxes for doctors and other higher-income earners, and decreases Medicare spending for our elderly.

Matt Gracey, Malpractice Insurance Expert, Danna-Gracey, can be reached at matt@dannagracey.com or (800) 966-2120.
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