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A Self-Inflicted "Crisis"

When NY’s Superintendent of Insurance announced a 14 percent across-the-board rate hike for medical liability insurance on July 1, 2007, doctors raised a hue and cry that the increase threatened a crisis in access to care because doctors could no longer afford to practice in New York and would be leaving the state or otherwise restricting their medical practices.  As in the past, doctors again blamed the premium increases on skyrocketing claims and lottery awards and demanded tort reforms that would cripple meritorious malpractice claims by the victims of medical negligence.

Today Public Citizen released a report that exposes these claims of the doctors as full blown, deliberate and obvious exaggeration: A Self-Inflicted “Crisis:” New York’s Medical Malpractice Troubles Caused by Flawed State Rate Setting and Raid on Rainy Day Fund. These same claims have been made by doctors during each of the three cycles of rising premiums that have occurred over the past thirty-plus years. Our report shows that rising malpractice premiums are not the result of any escalation in the frequency or severity in malpractice payments. The increase has nothing to do with patients, lawyers, judges, or our courts. It reflects an insurance problem.

Public Citizen’s analysis of the best available New York data demonstrates that the number of malpractice payments made on behalf of doctors in 2006 was at its lowest point since 1991. The total amount of malpractice payments for doctors, adjusted for inflation, was near or below fifteen year average in three of the past five years.

The amount of malpractice litigation in New York has not changed appreciably over the past eleven years. Thus, it is clear that the 14 percent increase in premiums did not reflect a sudden or dramatic change in either malpractice payments or litigation behavior.

In fact, the records of the Superintendent of Insurance show that the recent rate hikes come after a period of abnormally low rate increases. During the eight year period from July 1, 1995 through June 30, 2003, medical malpractice premiums actually declined by an average of 1.4 percent per year. The average rate hike since 1991 has been only 3 percent, less than half the rate of medical services inflation.

Claims by the doctors that they can no longer afford to practice medicine in New York and are leaving or restricting their practices are complete hyperbole. The latest statistics show that New York ranks near the top among states in the number of patient care physicians per 100,000 people with 339, compared to the national average of 239. Only two other states - Massachusetts and Maryland - along with the District of Columbia have higher physician/population ratios. The number of obstetricians is keeping pace with the population of child-bearing-age women and New York’s birth rate. The number of board certified specialists in the important fields of anesthesiology, emergency medicine, internal medicine, neurosurgery and surgery has also increased substantially over the past eleven years. Currently, New York is training more doctors and fellows than any other state and about 90 percent of those surveyed say they plan to practice in the area where they trained.

The Superintendent of Insurance, unlike the doctors, cited solvency problems  in the insurance industry as the reason for the rate increases. To the extent solvency is a problem, the causes may be traced to the intractable underwriting cycle that characterizes the entire property-casualty insurance industry. Rate hikes appear when the underwriters for reasons of competitive behavior and financial trends in the industry worry over the adequacy of their reserves and raise rates in response. New York also contributed to the present malpractice insurance problems when in the 1990s they raided the reserves of the states high-risk medical liability fund to the extent of $691 million. Now the chickens are coming home to roost for that unwise diversion of rainy day funds.

As Tom Baker said in his recent book, The Medical Malpractice Myth: “These are insurance problems, not tort problems, and they need insurance solutions.”

Doctors would be better advised to concentrate their efforts on reducing avoidable medical errors rather than clamoring for tort reforms that deprive those they kill and injure of the compensation they deserve. In 1999, the Institute of Medicine noted that medical errors kill as many as 98,000 people in the U.S. every year and called on the nation to cut such mistakes in half in the ensuing five years. Unfortunately, New York is failing to make significant headway in reducing avoidable medical errors, and may in fact be experiencing an increase in such errors. In 2005, the number of adverse events exceeded their seven year average in ten of 22 categories identified by NYPORTS and Medicare as adverse events.

New York needs to improve its oversight of doctors. Between September 1990 and December 2006, 6,186 doctors made two or more malpractice payments. This small number of doctors is responsible for a whopping 71 percent of dollars paid out on behalf of doctors in New York since September 1990.

Like Public Citizen, the New York’s Comptroller has called for improved physician oversight. Needed action includes, enforcement of existing guidelines, expanding criteria triggering investigation, proactive identification potential incidents of misconduct, improving collection and sharing of information with other agencies, completing investigations promptly and the state should provide more funding for this oversight.

Lest we need reminding, in the words of Tom Baker, a leading authority on insurance and law:

“One very clear conclusion emerges from the research on medical malpractice and medical malpractice lawsuits: The real medical malpractice problem is medical malpractice. It is not pretty to say, but doctors and nurses make preventable mistakes that kill more people in the United States every year than workplace and automobile accidents combined. Any research-driven approach to medical liability reform must start with this fact firmly in mind.”

Originally post on Tort Deform.


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