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Latest trends in medical malpractice premiums

According to the American Medical Association (AMA), the United States is recovering from a medical liability crisis. The association reports most physicians and surgeons older than 55 have been sued; furthermore, an increase in litigation led medical malpractice premiums to double from 2000 to 2004. However, the advocacy group Americans for Insurance Reform (AIR) argues that medical malpractice premiums are currently at a historic low.

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Medical malpractice premium trends

Medical malpractice insurance appears to run through a 10 year cycle, according to the Council of State Governments (CSG). The CSG notes that premiums increased significantly during the 1970s and 1980s. But, because medical malpractice insurance rates are partially based on administrative expenses and future investment income, a robust return on investments appeared to prevent large rate hikes in the 1990s.

Differences in social demographics and state laws mean most malpractice crises tend to be state specific. For example, the AMA found that the most recent crisis impacted southern states and some western states most acutely. Notably, average annual medical liability premiums for OB-GYNs in Miami, Fl. jumped from $147,621 in 2000 to $277,241 in 2004.

AIR, on the other hand, disputes the idea of a medical malpractice crisis. In a 2009 study, the group analyzed medical liability premiums and determined that when adjusted for inflation, rates were the lowest they had been in more than 30 years.

Tort reform and insurance premiums

To contain the cost of medical malpractice premiums, the AMA has been working to impose a national cap of $250,000 on non-economic damages in medical liability cases. According to the Congressional Budget Office, national tort reform could result in a 25 to 30 percent reduction in premium rates from the levels likely to occur under current law. However, savings at the state level would depend, in part, on malpractice legislation already in effect in a specific state.

However, AIR argues the available data does not support a link between losses for medical injuries and medical malpractice premiums. During much of the 2000s, losses grew at an average rate of 2 percent per year at a time when medical malpractice premiums jumped as much as 100 percent for some doctors.

 

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