Tuesday, October 18, 2005

Medical Malpractice Caps Are No Magic Bullet

The State of Wisconsin is set to take another stab at capping non-economic compensatory damages in medical malpractice awards. Yet another attempt by Assembly Speaker Gard to make Wisconsin the least user-friendly state in the union.

From JSOnline:

Legislation that would reinstitute limits on jury awards in medical malpractice lawsuits is to be rolled out this week, although it has yet to win the support of Gov. Jim Doyle.

The proposal from Assembly Speaker John Gard (R-Peshtigo) and other Republicans would establish two sets of caps on what victims of medical malpractice can win in court. If the bill becomes law, awards for the pain, suffering and other non-economic damages of people injured as adults could not exceed $450,000; awards for those injured while under age 18 would be capped at $550,000.

The new caps would allow for adjustment to keep up with inflation and replace a 10-year-old limit on malpractice awards that the state Supreme Court found unconstitutional in July.

Unfortunately, this is just the kind of pro-business legislation that has, in the past, prompted Governor Doyle to cross the aisle and join with the Republicans. The state Supreme Court's decision left the door open for a reconsideration of medical malpractice caps, saying that while the one's in effect prior to July were unconstitutional, a re-defined version may pass judicial muster.

Medical malpractice award caps are one of the Golden Geese of Republican policy, the belief being that by capping non-economic, or "pain and suffering", damages, doctors will see a decrease in malpractice insurance premiums and will thus be drawn to practice in states with caps. The only problem with this scenario, is that there is no evidence to support that malpractice award caps have any such effect. In fact, quite the opposite (via Weiss Ratings Inc.):

Caps on non-economic damages have failed to prevent sharp increases in medical malpractice insurance premiums, even though insurers enjoyed a slowdown in their payouts[.]


In 19 states that implemented caps during the 12-year period, physicians suffered a 48.2 percent jump in median premiums, from $20,414 in 1991 to $30,246 in 2002. However, surprisingly, in 32 states without caps3, the pace of increase was actually somewhat slower, as premiums rose by only 35.9 percent, from $22,118 to $30,056.

What's more surprising is that Republican officials continue to push the idea that med mal caps are a "magic bullet" to solve rising malpractice insurance premiums, in spite of the clear evidence to the contrary.

Further, there is also growing evidence that non-economic damage caps don't even reduce the actual dollars paid to the victim.

From The Project on Medical Liability in Pennsylvania:

An objective analysis of the efficacy of medical malpractice caps on non-economic damages in medical liability cases shows that awards for non-economic damages - pain and suffering, physical impairment, disfigurement, marital losses, anguish, and inconvenience - do not significantly and systematically reduce overall awards to plaintiffs. In fact, limiting non-economic damages may be contributing to a rise in economic damage - lost wages, medical expenses (past and future), rehabilitation expenses, and other financial costs.

Clearly then, the Republicans in support of med mal caps must be sensing some kind of benefit from the supply side of the malpractice insurance industry; a gentleman's agreement that, in exchange for lucrative tax cuts and de-regulation, the insurance providers will ease the burden on potential GOP-voting medical practitioners.

Suprisingly, even this is not the case. From Consumer Affairs:

GE Medical Protective's finding was made in a regulatory filing with the Texas Department of Insurance (TDI),in a document submitted by GE to explain why the insurer planned to raise physicians' premiums 19% a mere six months after Texas enacted caps on medical malpractice awards.


According to the Medical Protective filing: "Non-economic damages are a small percentage of total losses paid. Capping non-economic damages will show loss savings of 1.0%."

The company also notes that a provision in the Texas law allowing for periodic payments of awards would provide a savings of only 1.1%. The insurer did not even provide its doctors that relief and eventually imposed a rate hike on its physician policyholders.

So, to recap, as it were, states with caps on non-economic damages in malpractice suits have seen higher damage payouts and greater increases in doctors' premiums than states without. Any fiscal conservative worth his/her salt should be scratching their heads and wondering where the benefit lies in this policy.

This appears to be nothing more than Republican rhetoric designed to play off a perception of unfairness among their rank and file constituency. After all, many if not most conservatives in the country have a rather strict qualification for what applies as "deserved". If med mal payouts are perceived as too high, conservatives believe that the victims are getting more than they "deserve", which is unacceptable to the conservative worldview. Note that said concept of "deserve" does not apply to the wealthy or to businesses; conservatives have been duped into believing that corporate welfare and tax cuts for the rich drive economic growth, in spite of all the evidence to the contrary.

The only group benefiting from this political boondoggle is the Republican party. It's a detriment to doctors because of higher premiums, a detriment to the insurance company because of higher payouts and a detriment to consumers because of higher medical costs. Looks like they've hit the trifecta again!

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