HEIDI TOTH - Daily Herald | Posted: Saturday, July 1, 2006 11:00 pm
Don't expect going to a specialist to get any cheaper, although Utahns are no worse off than the average American.
That's the word from the American Medical Association as medical liability insurance rates have continued to climb. Utah is no exception; according to a talk given by AMA President J. Edward Hill in Salt Lake a year ago, insurance rates for doctors have increased 70 percent since 2002, the number of claims climbed by 40 percent and the average amount paid per claim doubled. And according to a recently released Harvard analysis, almost half of the claims filed nationwide are groundless.
It's not yet a crisis, but it's a problem.
Marty Oslowski, president and CEO of the Utah Medical Insurance Association, said states generally are listed as crisis or problem states when premiums were rising fairly substantially, which he suspected was the case in Utah.
"We have implemented a series of rate increases over the last four or five years that probably designated us as such," he said, adding annual rates have increased about 200 percent since 2000.
The rates are a bit lower for the Mutual Insurance Company of Arizona, another provider, said Chairman and CEO Dr. James Carland. The company has tried to keep its rate increases to single digits or low double digits.
The reason for the increases, he said, are not that more people are suing doctors. Rather, it's that people who are suing doctors are asking for, and in many cases getting, a lot more money.
"The claims' severity has not declined, and that continues to increase in some instances based upon jury verdicts at somewhat of an alarming rate," he said, citing a recent $40 million verdict in California.
Even though only a few cases actually go to trial, plaintiffs go to settlement conferences based on comparable verdicts in the same area, he said. As those rise, so do settlement demands.
Oslowski concurred with the assessment said the rising cost to settle claims is putting the biggest pinch in the budget and requiring increasing rates on his end. And while he said the insurance industry is cyclical, he doesn't anticipate any dramatic shrinking of rates.
"I think the best you can hope for is a leveling off," he said.
Dr. David Sundwall, executive director of the Utah Department of Health, agreed.
"Medical malpractice is what I call cyclical and regional," he said. "It happens periodically and it seems to happen worse in some parts of the area than others."
Both said the situation has not reached a level that average doctors are being forced out of business, but Sundwall, who was alerted to rising rates by an orthopedic surgeon whose rates tripled in the last few years, said the problem is restricting people's access to health care, particularly the riskier specialties.
He did disagree on some of the cause behind the increases, saying he didn't think the number of claims in Utah had gone up significantly; he estimated the rate increases had more to do with the profitability of the insurance company's investments. If those investments don't do as well, the insurance companies have to raise rates to remain profitable, he said.
Not so, Oslowski responded. Rates are affected by investment income, but because the money is invested in bonds, not the stock market, the association is assured a fixed income, and it discounts rates to account for the investment income the company makes.
"It's not tied to anything," he said. "It is tied to loss costs. Rates are tied to losses."
Both UMIA and MICA are mutual companies, Carland said, so they're not out to make a profit. Where companies are most affected by investments is in the payout process based on how much a company has invested versus how much a company charges for premiums.
"The money used to pay that claim obviously earned interest in the interim," he said; the less interest that money earned, the more the premium payments have to cover it.
He agreed the number of claims hadn't changed much, but the costs per claim had. As attorneys sought out more parties who could claim injury -- what Sundwall termed "clearly beating the bushes for business" -- costs on all fronts were rising.
"I don't want to block our access to courts if you suffered a real injury," Sundwall said, adding people who have actually been injured because of a doctor's negligence need an option for redress. "What I support, however, is what we call mandatory non-binding arbitration."
All three men cited California's Medical Injury Compensation Reform Act as a way to reign in costs. It includes arbitration and caps on non-medical payments, and Sundwall said similar tort reform in Utah could yield positive results. The state Legislature passed a law requiring arbitration in medical malpractice suits in 2003 but repealed it in 2004.
Heidi Toth can be reached at 344-2543 or htoth@heraldextra.com.
This story appeared in The Daily Herald on page A1.