The other side of the debate
Tuesday, Feb 22, 2005 - Posted by Rich Miller
From today’s New York Times:
But for all the worry over higher medical expenses, legal costs do not seem to be at the root of the recent increase in malpractice insurance premiums. Government and industry data show only a modest rise in malpractice claims over the last decade. And last year, the trend in payments for malpractice claims against doctors and other medical professionals turned sharply downward, falling 8.9 percent, to a nationwide total of $4.6 billion, according to data compiled by the Health and Human Services Department. […]
Lawsuits against doctors are just one of several factors that have driven up the cost of malpractice insurance, specialists say. Lately, the more important factors appear to be the declining investment earnings of insurance companies and the changing nature of competition in the industry. […]
Data compiled by both the federal government and by insurance organizations show costs for the insurance companies climbing steadily over the last decade at an average annual rate of about 3 percent, after adjusting for inflation. Over most of that period, premiums for doctors rose modestly and sometimes even dropped as the insurance companies battled for market share in a scramble to collect more money to invest in strong bond and stock markets. But when the markets turned sour and the reserves of insurers shriveled, companies began to double and triple the costs for doctors. […]
And some researchers are skeptical that caps ultimately reduce costs for doctors. Mr. Weiss of Weiss Ratings and researchers at Dartmouth College, who separately studied data on premiums and payouts for medical mistakes in the 1990’s and early 2000’s, said they were unable to find a meaningful link between claims payments by insurers and the prices they charged doctors.
“We didn’t see it,” said Amitabh Chandra, an assistant professor of economics at Dartmouth. “Surprisingly, there appears to be a fairly weak relationship.”
Go read the whole thing.
- Anonymous - Tuesday, Feb 22, 05 @ 5:21 pm:
NY Times — please. What side do you think this paper is going to favor? Weakly argued.
- Rich Miller - Tuesday, Feb 22, 05 @ 5:34 pm:
Calling them liberals and announcing they have a weak argument is not an argument. It’s simple-minded cynicism.
- ArchPundit - Tuesday, Feb 22, 05 @ 6:31 pm:
More to the point, why isn’t the Lege demanding their actuarial tables that demonstrate the problem. There’s three parts to the problem
1) Insurance Investments
2) Malpractices payouts
3) Doctor competence
For the most part the insurance industry has done a great job keeping the focus on 2 when 1 and 3 are just as important.
If insurance companies want to lower their costs, they have to demonstrate that their costs in terms of payouts are rising–and that is contained in their actuarial projections and sometimes in the economist models they develop–sometimes those don’t agree, but if there is such a tremendous problem–show it to everyone.
- Anonymous - Tuesday, Feb 22, 05 @ 7:29 pm:
I don’t think it’s cynical to point out that the NYTimes attacks every major position Bush takes. It’s fact. It would shock me if the experts and evidence they reference aren’t directly tied to the trial lawyer lobby. The Times has DEMONSTRATED time and time again its acute liberal bias. Even its reader advocate concedes it is a liberal paper. So why would a non-liberal trying to get to the bottom of an issue start there?
- Vasyl - Tuesday, Feb 22, 05 @ 9:52 pm:
I’ll second what Larry (archpundit) had to say.
As for the folks who simply dismiss the NYT article and the Dartmouth study: a simple accusation of bias, even if true, does not make a conclusion false.
You guys got anything other than “liberal New York Times hates Bush” to back up your claims that malpractice premiums are driven purely by damage awards?
- Anonymous - Tuesday, Feb 22, 05 @ 10:24 pm:
Cali-fornia
- Rich Miller - Tuesday, Feb 22, 05 @ 10:32 pm:
California is a VERY bad example to hang your hat on because that state prohibits insurance rates of over 15 percent without a public hearing.
- Anonymous - Tuesday, Feb 22, 05 @ 11:07 pm:
I believe the real improvement there came after the caps. That law had already been in place.
- Anonymous - Tuesday, Feb 22, 05 @ 11:37 pm:
What I meant to say was that caps were in place first and rates started going down. then the insurance law was passed. Also, a GAO study a year or two ago said high premiums were directly attributable to high awards, not insurance investments. And study after study shows that states with hard caps have lower premiums than states that don’t.
- ArchPundit - Wednesday, Feb 23, 05 @ 10:35 am:
There’s a real problem with this debate though–one act may lower costs, but does it equitably distribute the costs of that action.
The problem with the system as I see it is that it’s like a damn lottery. Does a cap solve that problem or does it just lower the costs?
Does a cap prevent or reduce incentives a hospital from holding bad physicians accountable? Guys with degrees from Grenada have more lawsuits than guys with degrees from Wash U. Perhaps the system should be policing bad doctors. Certainly a comprehensive reform should do that and remove the danger of bad doctors.
If bad doctors are being kept in the system (an entirely empirical question), isn’t that a cost to such a cap?
More to the point, why aren’t the opportunity costs being considered across these three dimensions of the policy?
I’m open to reducing venue shopping and certainly want to examine whether certain high risk areas need some sort of additional protection, but much of this debate is missing important elements of the problem.
Are neurosurgeons leaving Southern Illinois because of insurance, or is that a factor along with the increasing centralization of the health care industry?
These are serious questions and no one is asking them in conjunction with the other dimensions.
- Anonymous - Wednesday, Feb 23, 05 @ 10:43 am:
Maybe Bob Cliffor and Phil Corboy can make MORE money.
There are really only a few lawyers making big money
(Kevin Burke Mahoney and Wise are big new players)
there is a cozy relationship with referrals and even doctors
This is NOT good for the economy and only good for a relatively small group of lawyers
- Pat Collins - Wednesday, Feb 23, 05 @ 11:59 am:
Well, if investment hits are causing insurance rates to rise, did the bull market of the 90’s artifically lower them?
And why are companies that do biz in Illinois so much worse at investing as those in Indiana/Wisconsin?
You know, its not just neurosurgeons down south. There are whole counites down there where you can’t have a baby in a local hospital. That is what Joe everyman knows, and it’s why the last SC race went the way it did.
As for corp. health care, they LIKE imported doctors/nurses. Keeps costs down, just like corp. America likes H1-B/L1 visas.
- ArchPundit - Wednesday, Feb 23, 05 @ 4:01 pm:
Given prices are sticky downward, better investment income means that prices stay the same, though there were many rate reductions in the late 1990s.
In terms of why are Illinois rates different than other states, that’s the question isn’t it? Same insurance companies often, different rates. The assumption many make is that it is due to tort law, but insurance regulation is another issue. Which is exactly why releasing the actualarial information should be required if they want state action. Quite simply–why wouldn’t one release the information if it supports their insurance companies arguments?
They are asking for a level of immunity that may or may not be reasonable. I’m a bit befuddled why free market advocates wouldn’t want specific evidence of a problem before interrupting the market. The assumption seems to be that government knows better than the market in this case–why is that different from other circumstances?
And why is asking for the information unreasonable if one wants the market to be reshaped?
But again, on this hospital issue you have two competing explanations
1) Changing structure and consolidation of medical services
2) Loose tort laws
The problem is that one has changed during this period and the other hasn’t. So whatever people want to believe is nice, but it’s be stupid to make a change and then find out the other explanation was more of a factor–and a round of losing more health care options.
All of this comes down to, why shouldn’t the party clamoring for protection release their information for the Lege to look at and analyze?