Tort Reform Does Not Lower Insurance Costs
With a new incoming Missouri governor, talk for further tort reform in the Show Me State is heating up. One long-standing argument for tort reform is that it will reduce the cost of insurance. Doctors, the argument goes, are being squeezed out of practice due to rising insurance rates.
But does limiting the legal rights of those seriously injured or killed due to a medical error actually reduce insurance costs? According to two new studies, the answer is a definite no.
Americans for Insurance Reform is a nationwide collection of consumer rights organizations working to improve the insurance industry. It recently released the findings of two studies it conducted having to do with medical malpractice lawsuits.
One survey looks at the relationship between medical malpractice claims and medical malpractice insurance premiums. The other examines what effect, if any, does tort reform - which infringes on the right to pursue just compensation from negligent care givers - have on reducing medical malpractice insurance premiums.
Today's Medical Malpractice Insurance Premiums Lowest in 40 Years
The study titled "Stable Losses/Unstable Rates 2016" reviewed medical malpractice insurance payouts to injured patients and the medical malpractice insurance premiums doctors paid to insurance companies over the last 40 years. Researchers concluded that, when adjusting for medical care inflation, current med mal insurance premiums and claims per physician are at their lowest levels in those 40 years.
Insurance premiums did spike in three different periods over those four decades, what the researchers call "hard markets." It is during these times that shouts for tort reform are at their loudest. But there is no relation at all between insurance rates and financial awards to patients hurt by medical mistakes, such as a drug error.
Hard markets, the researchers argue, last about three to four years and are caused by the economy, the profitability of insurance company investments, and other factors. The researchers note that hard markets are followed by soft markets, in which med mal insurance premiums fall. It's simply the roller coaster nature of the insurance industry.
States with No Tort Reform Experience Big Decrease in Insurance Premiums
The other study, "Premium Deceit 2016: The Failure of Tort Reform to Cut Insurance Prices," looked at the most recent hard market, which was from 2002 to 2006. Over that time, states that initiated new tort reform measures saw med mal insurance premiums fall an average of 22.7 percent. But states that placed no restrictions saw a larger decrease - an average of 29.5 percent.
Also during this hard market, states that put limits on financial awards experienced an average decrease of 21.8 percent in insurance premiums. Yet states without such caps experienced an average cut in premiums of 28.9 percent.
The authors of both studies conclude that reform isn't really needed to our country's court system. It's the nation's insurance industry that needs reforming.
If you were catastrophically hurt or lost a loved one due to a mistake in medical care, discuss your case with an experienced medical malpractice attorney to pursue the financial compensation you deserve.
The choice of a lawyer is an important decision that should not be based solely on advertising.