Do caps on medical malpractice damage awards hold down doctors' liability insurance premiums? The nation's largest medical malpractice insurer says they don't.
GE Medical Protective's finding was made in a regulatory filing with the Texas Department of Insurance (TDI),in a document submitted by GE to explain why the insurer planned to raise physicians' premiums 19% a mere six months after Texas enacted caps on medical malpractice awards.
In 2003, Texas lawmakers passed a $250,000 cap on non-economic damage compensation to victims of medical malpractice caps after Medical Protective and other insurers lobbied for the change.
According to the Medical Protective filing: "Non-economic damages are a small percentage of total losses paid. Capping non-economic damages will show loss savings of 1.0%."
The company also notes that a provision in the Texas law allowing for periodic payments of awards would provide a savings of only 1.1%. The insurer did not even provide its doctors that relief and eventually imposed a rate hike on its physician policyholders.
"When the largest malpractice insurer in the nation tells a regulator that caps on damages don't work, every legislator, regulator and voter in the nation should listen," said Douglas Heller, executive director of the Foundation for Taxpayers and Consumer Rights (FTCR).
"Medical Protective's rate increase and this smoking gun document prove that the insurance industry cannot be trusted on the issue of malpractice caps."
Medical Protective and other supporters of medical malpractice caps have repeatedly argued that damage awards are the primary reason for skyrocketing medical malpractice premiums. For example, in a March 2004 report. GE Medical Protective stated that capping non-economic damages is a "critical element [of reform] because in recent years we have seen non-economic damages spiraling out of control."
The Texas rate increase and the actuarial data submitted by the company contradicting the oft-stated importance of caps should lead policymakers to look to insurance regulation, rather than malpractice caps, as a solution to high premiums, according to FTCR.
"While medical malpractice caps limit the rights of injured patients, they do not lower doctors' premiums. If lawmakers and physicians want to reduce costs, they should start fighting to reform insurance companies rather than restrict patients' rights," said Heller.