Thursday, October 28, 2004

Insurance Malpractice

No, I didn't get my title mixed up. Remember during the debates how we heard so much from Bush about how soaring medical malpractice insurance rates were caused by evil trial lawyers and outrageous punitive awards? (Not that we've heard much about that since, but that's another story...) And that the only way to cure the problem was with damages caps?

Seems that either Bush had bad information - where have we heard that before - or he was lying out of his ass. If I remember correctly, the number Kerry used was 0.5% of the rise in insurance rates for doctors could be traced to so-called "problems" with the tort system. Seems that John Kerry was much closer to correct that Bush. From this morning's Wall Street Journal (subscription):

Last year, after a pitched political battle, Texans voted to amend their state constitution to allow caps on awards for noneconomic damages, such as pain and suffering, in medical-malpractice cases. In most cases, that cap is $250,000.

In a filing with the Texas Department of Insurance seeking a rate increase, Medical Protective Co., an arm of General Electric Co., said the caps would lower payouts by just 1%.
Much like the "Texas Miracle" in school reform, seems that Texas' tort reform is so much smoke and mirrors. While the number one medical insurer in Texas enacted a rate reduction after the reform bill passed, the filing from which the 1% figure is taken was filed by the number two insurer as part of a request for a 19% rate increase. If this gets through the review process, there's no doubt that the top insurer will follow suit.

The relevant sentence from the filing: "Noneconomic damages are a small percentage of total losses paid. Capping noneconomic damages will show loss savings of 1.0%."

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