Monday, June 02, 2003

The Truth About Malpractice Caps

Well, lookie here...

Time Magazine's June 9, 2003, cover story, "The Doctor is Out," contains breaking news confirming what consumer advocates have been saying for years: caps on malpractice damage awards will not result in lower malpractice insurance premiums.

According to Time ("A Chastened Insurer"), a study to be published this week by Weiss Ratings, an independent insurance-rating agency in Palm Beach Gardens, Florida, found that between 1991 and 2002, states with caps on noneconomic damage awards saw median doctors malpractice insurance premiums rise 48 percent -- a greater increase than in states without caps. In states without caps, median premiums increased only 36 percent. Moreover, according to Weiss, "median 2002 premiums were about the same" whether or not a state capped damage awards.

Time reports, "Weiss found nine states with flat or declining premiums; two of them had caps, seven didn't. Weiss speculates that regulation of premium increases made the difference. In California, consumer groups argue that the state's tough oversight of the insurance industry, not its caps on damages, explains why rates have grown more slowly."

I'm sure it's rather simple. Insurance industry friendly states are also likely to have malpractice caps, with little regulatory enforcement or oversight. So, the caps themselves aren't important.