The District of Columbia is the latest in a growing number of jurisdictions trying to combat rising malpractice insurance premiums among physicians, as legislators there battle over whether the best solution is damage caps or increased regulation of insurers.
D.C. Mayor Anthony Williams has proposed legislation that would limit noneconomic damages to $250,000 and expand the city's Good Samaritan law to provide immunity to all health professionals who provide free care.
“The District is home to some of the best medical care in the country,” Mayor Williams said when he announced the bill. “This bill is all about ensuring that our residents and visitors always get top-notch care and that our medical community can practice without undue burdens.”
Linda Cropp, chair of the District of Columbia City Council and a frequent political adversary of Mr. Williams, has introduced her own medical liability reform bill. Under Ms. Cropp's bill, the city's insurance commission would be required to approve all proposed liability premium increases that exceed a certain percentage, would allow the insurance commissioner to consider a malpractice insurer's current surplus as a factor in rate making, and would authorize refunds for physicians who have paid excessive insurance premiums.
Unlike Mr. Williams, Ms. Cropp said she believed that tort reform wasn't the answer. “The problem is the high [cost] of insurance,” she said in a statement. “Payments to patients who sue doctors in the District have declined dramatically, even as doctors and politicians have blamed skyrocketing jury awards for driving up the cost of malpractice insurance and driving doctors out of business.”
Ms. Cropp cited a recent analysis by the consumer watchdog group Public Citizen to back up her contention. That analysis found that insurer payouts in the city, when factored for inflation, dropped from $29 million in 2001 to $11 million in 2004, a reduction of more than 62%.
“Did the malpractice insurance rates paid by doctors drop commensurately?” Ms. Cropp said. “No, they did not.”
But Victor G. Freeman, M.D., president of the Medical Society of the District of Columbia, disagreed with Ms. Cropp's approach. “Linda Cropp's heart is in the right place,” Dr. Freeman, an internist, said in an interview. “She recognizes there is a crisis, and her solution is to make sure there is tighter regulation around medical liability rates in town. Unfortunately, I think she's been misled by Public Citizen and the trial lawyers, because she believes medical liability companies are making huge profits in the city at the expense of physicians.”
Dr. Freeman suggested that Ms. Cropp might want to consider that NCRIC (formerly the National Capital Reciprocal Insurance Co.), the liability insurer for 80% of the District's physicians, lost $7 million last year. “If NCRIC wasn't losing money, other companies would come in and compete. They're staying out for one very clear reason: It's bad business to come into the District because of the high jury awards.”
The Public Citizen study that Ms. Cropp referred to is one of several studies on malpractice insurance that recently have been published. A study of 27 states appearing in the online version of the journal Health Affairs found that counties in states that had a cap on noneconomic damages had 2.2% more physicians per capita than counties in states without a cap (Health Aff. [Millwood] May 2005:[Epub ahead of print]). The study, which used data from the years 1985–2000, also found that rural counties in states with a $250,000 cap had 5.4% more ob.gyns. and 5.5% more surgical specialists per capita than did rural counties in states with a cap above $250,000.
Health Affairs also published an online study showing that malpractice payouts appear to be growing more slowly than previously thought (Health Aff. [Millwood] May 2005;[Epub ahead of print]). Using data from the National Practitioner Data Bank, Amitabh Chandra, Ph.D., of Dartmouth University, Hanover, N.H., and colleagues found that the average payment—including both settlements and judgments at trial—grew by 4% per year between 1991 and 2003, consistent with increases in other health care costs. Finally, another recent study found that the adoption of “direct” malpractice reforms—including reducing damage caps—resulted in a 3.3% increase in physician supply.
“Our results illuminate the mechanisms by which malpractice liability reduces growth in physician supply,” wrote Daniel P. Kessler, Ph.D., of Stanford (Calif.) University, and colleagues (JAMA 2005;293: 2618–25). “In our study, the estimated effect of direct reforms was greater among physicians who practice in nongroup settings. … This is consistent with the lesser ability of smaller practices to spread liability insurance costs among many physicians, cushion premium volatility with high patient volume, or share risk with hospitals or other health care institutions.”