Gouging doctors on insurance

Hartford Courant
Tuesday, July 19, 2005

Trial lawyers often are blamed for being primarily responsible for soaring medical malpractice insurance premiums. But a new report, released by a New York-based consumer advocacy group, the Center for Justice and Democracy, makes a strong case that insurers have engaged in price gouging by charging doctors premiums far in excess of what is needed to cover claims.

Nationally, premiums collected by 15 leading insurers more than doubled between 2000 and 2004, while claims payments remained flat. The discrepancy was more pronounced in Connecticut, where premiums soared 213 percent, while claims actually dropped 1.6 percent. 

Connecticut Attorney General Richard Blumenthal noted that the numbers ``underscore the need for much tougher, more aggressive oversight to prevent and punish profiteering.''

Medical malpractice insurance is a complex subject. Too often, though, the debate has focused on jury awards, which may play a much smaller role in skyrocketing premiums than many believe.

Insurers contend they must set aside enough money each year to cover future claims, but the study showed that some insurers increased premiums substantially when current claims and projected future claims were decreasing.

If insurers were faring poorly, the financial markets would punish them. But the stock prices of the three publicly owned companies included in the study have doubled since mid-2002.

It would be an oversimplification to say insurers are solely to blame for the skyrocketing rates that have prompted some physicians to quit practicing medicine. But the report contains powerful evidence to rebut the stereotype that, in Mr. Blumenthal's words, portrays ``personal injury lawyers as the complete culprits and the insurers as innocent bystanders.''

State insurance commissioners, including Connecticut Commissioner Susan F. Cogswell, must do a better job of scrutinizing rate filings to ensure that proposed hikes are justified.

Gov. M. Jodi Rell recently signed into law a comprehensive bill that requires Insurance Department approval for any medical malpractice insurance increase greater than 7.5 percent. Currently, there is no requirement for prior approval. The bill also permits affected parties to request a public hearing. These are positive steps.

Even though the overall malpractice bill is imperfect, it is a start toward dealing with an intractable problem.
For a copy of the complete article, contact CJ&D

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