The Reason Insurers And The Medical Community Admit Tort Reform Doesn’t Reduce Premiums is Because History and The Hard Data Prove It

Placing additional restrictions on the rights of victims of medical negligence, which is the solution offered by MAG, the hospitals and the insurance industry, will not work to lower insurance premiums – they have failed in the past and will fail again in the future.  A July 2002 study by the National Academy of State Health Policy (funded by the Robert Wood Johnson Foundation) found that “[t]he move toward more restrictive tort reform does not address the complexity of the problem.  Previous rounds of tort reform that followed the malpractice insurance crisis of the 1970s and 1980s have not succeeded in preventing periodic and dramatic rises in insurance premiums.”[25]

Despite the overwhelming proof to the contrary, insurers and the medical community claim that capping damages will attract doctors and keep down malpractice costs.  However, according to the American Medical Association:

States without caps on damages have 4.4% more physicians per capita than those states that do have caps on damages.26]

Also, the average malpractice premium for doctors of internal medicine is 2.2% higher in states that cap damages than in states that do not cap damages[27] 

In fact, according to data from the American Medical Association, California, which has the most restrictive medical malpractice caps in the country, saw its malpractice premiums b>rise 37% between 1988 and 1998.[28]  During the same period, MAG Mutual’s premium levels went down over 40%.

In 2001, California’s actual average premium per physician of $27,570 far exceeded Georgia’s average of $19,248.00[29] As of 2002, the average liability premiums averaged across all specialties are 25% higher in California than in Georgia.[30]  Likewise, premiums for ob/gyns are 25% higher in California than in Georgia.[31] 

Clearly, California is not the model Georgia should follow.  Even the passage of California’s much heralded tort reform law of 1975, MICRA, did not result in a reduction of malpractice premiums.  When the litigation over the constitutionality of those provisions was finalized several years later and California’s medical community still did not begin receiving any relief from escalating liability insurance premiums, the citizens of that state passed Proposition 103.  That public initiative eliminated the insurance industry’s exemption from antitrust laws, it mandated rollbacks in insurance rates and it required insurance companies to get pre-approval of any rate hikes from the state’s insurance department.  Only then did California’s medical community begin to enjoy some stabilization of its insurance premiums.  Thus, if reducing malpractice insurance premiums is the measuring stick to judge the efficacy of tort reform, California’s MICRA has been a complete and utter failure. 

Critically, no state has ever experienced a reduction in medical malpractice insurance rates as a result of the passage of tort reform! 

As of 2001, 4 of the 5 states that had the most expensive medical malpractice insurance premiums also had the same “tort reform” provisions the medical and insurance industries want to pass in Georgia.[32] 

Half of the 25 most expensive states for buying medical malpractice insurance have the same or similar laws and half of the 25 least expensive states have the same or similar laws.[33]

There simply is no correlation between tort reform and reduced malpractice premiums.

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