Study: Lawsuits not to blame for doctors’ rising premiums

A new study by Dartmouth College researchers, published May 31 by the journal Health Affairs and reported yesterday in The Boston Globe, says that increases in doctors’ insurance premiums are the result not of medical malpractice lawsuits, but of insurers’ poor investments.

The Boston Globe article says:

“Re-igniting the medical malpractice overhaul debate, a new study by Dartmouth College researchers suggests that huge jury awards and financial settlements for injured patients have not caused the explosive increase in doctors’ insurance premiums.

“The researchers said a more likely explanation for the escalation is that malpractice insurance companies have raised doctors’ premiums to compensate for falling investment returns.”

The full text of the report is available here.

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  • Of course, the Boston Globe article merely states what lawyers in the personal injury business have known for years. Many states, such as Michigan, passed ftort reform back in the mid 1990’s. Yet, medical malpractice rates still climb. Lawsuits against doctors have virtually no impact on the bottom line. The insurance company reserves are ciritcal to premiums. Where the insurance companies choose to place those reserves within the investment market controls the return. As the stock market took a beating after September 11th, those reserves also took a beating. Insurance companies have to replace those reserves with premium dollars directly from doctors.
    It would be nice if the truth concerning medical mal-practice insurance premiums was broadly disseminated. However, insurance companies have such huge budgets, they are able to spend a tremendous amount of money misrepresenting the impact of lawsuits on premiums in order to push their tort reform packages.

    In short, insurance companies want their insureds to be protected from lawsuits even when their insured is negligent.