Doctors in the U.S. gravitate to states that cap malpractice awards

Jun 1 2005

According to two studies released this week many doctors are gravitating to states that place caps on malpractice awards, despite the fact that such awards are not the primary cause of skyrocketing insurance premiums.

Amitabh Chandra, an economics professor at Dartmouth University, who was the study's lead author, says the large awards juries have granted which attract so much public attention, are in fact rare events and comprise a very small portion of all malpractice payments. Chandra says they are certainly not the key drivers of malpractice insurance increases.

Chandra says that state regulation of malpractice insurers, as well as the investment practices of insurers themselves, are better explanations for the increase in premiums.

In the study 184,506 payments that insurers made over a 13-year period ending Dec. 31, 2003 were examined. The researchers found that the amount of the payments grew 4 percent annually, and they describe this as consistent with the overall increase in health care spending during that time frame.

The average payment grew from $173,018 in 1991 to $263,101 in 2003.

All malpractice payments made on behalf of a licensed health care provider, under federal law, must be reported to the National Practitioner Data Bank within 30 days. The authors relied on the data bank for their study.

According to a separate study published at the same time, though the authors dismiss the importance of the caps in curbing premium increases, they say doctors certainly have not dismissed their importance.

This study looked at the growth in the number of physicians per 100,000 residents from 1970 to 2000, and the researchers found that the number of doctors increased 83 percent in states that had no cap on non economic damages. The growth rate was slightly higher, 86 percent, for states enacting caps in the 1970s. The growth rate was much higher, 102 percent, for states enacting caps in the 1980s.

The researchers factored in various items that might account for the increase in physicians, such as income and unemployment rate, death rates for a variety of diseases, racial composition of the community and whether a medical school was in the area.

Frank Clemente, a spokesman for the consumer advocacy group Public Citizen, says that many of the states that have put caps in place are conservative states in the South, where there has been large population growth. He says doctors are like anybody else and they go where the business is.

President Bush supports a proposal that caps payments for pain and suffering at $250,000 in medical malpractice cases, but as yet Congress has not passed such legislation.

The American Medical Association, a lobbying group for doctors, says the study shows that caps on non economic damages work to ensure patient access to care.

Donald Palmisano, immediate past president of the American Medical Association, says, in comparison an obstetrician in Los Angeles, where reforms are in place, pays about $63,000 a year for insurance, yet that same obstetrician in Miami, with no reforms, pays $277,000 or more.

The studies are published in the journal Health Affairs.