Hospitals in West Virginia and Pennsylvania rang in a hearty New Year last Wednesday by transferring patients to hospitals as far as 90 miles away. They also significantly cut emergency room services and turned patients away. These hospitals are no longer able to provide quick and quality healthcare, because their doctors -- mostly surgeons -- are walking out on job, saying that they can't afford to practice medicine anymore due to soaring malpractice insurance premiums.
With the coming of the New Year, insurance companies are raising the premiums that doctors must pay to guard themselves against malpractice lawsuits. Doctors are responding to premium hikes by taking a hike from surgical medicine. The doctors in West Virginia and Pennsylvania are protesting the premium changes by altering the format of their practices -- no longer performing the high-risk operations for which they were trained -- or by taking leaves of absence.
High insurance premiums for doctors are nothing new, but recently they are becoming more and more outrageous. Gregory Saracco, one of the doctors who walked out last Wednesday, said that last year he was paying over $70,000 in malpractice insurance and couldn't handle the $30,000 increase that this year would bring. Surgeons in Willow Grove, PA said that insurance rates were nearly doubling this year: from $85,000 last year to $150,000 this year. Another doctor in Scranton, PA is quoted as saying that his insurance rates were $450 per day.
These doctors are caught between a rock and a hard place. They lament the shifting or closing of their practices, citing their desires to help people and their abilities to provide solid healthcare. At the same time, in an age when lawsuit awards can be in the hundreds of millions of dollars, doctors simply must protect themselves with malpractice insurance.
Are insurance companies justified in charging doctors such extreme premiums? Is there something going on behind the scenes in the insurance industry that allows insurers to charge so much money that physicians can't afford to practice medicine, ultimately making it more difficult for patients to seek care?
Insurance companies defend the rise in premiums by saying that they are constantly being burned by large awards in malpractice lawsuits. These companies argue that the only way that they can continue to pay out such large verdicts is by raising doctors' premiums.
The insurance companies try to make the case for the domino effect. They say that if legislation could cap the amount of money that a jury can award or make it more difficult to sue for malpractice, then they will no longer have to pay lotto-sized verdicts. Because the insurance companies are no longer paying out so much money, doctors will not have to pay such high premiums to keep the companies afloat. Thus, the insurance companies argue, the actual cost of healthcare will decrease, because patients will not have to carry the burden of funding their doctors' premiums.
On one hand, the insurance companies' claims seem valid. If they must pay out so much money in so many lawsuits, then how can they hope to cover costs to insure their patrons in any other way than by raising premiums? On the other hand, some doctors and trial lawyers see value in malpractice lawsuits. Mistakes do and will continue to happen, but the fear of large verdicts ensures that doctors won't become careless. In this scenario, lawsuits may help keep doctors from becoming complacent or arrogant in medical practice, resulting in better healthcare.
Do the dominoes start falling where the insurance companies say they do? According to a study published in October 2002 by Americans for Insurance Reform (AIR), insurance companies using misdirection in blaming large jury verdicts for their financial woes.
AIR notes that insurance companies' abilities to pay out large verdicts are dependent upon the health of the economy. AIR found a five to ten year lag time between the moment that insurance companies receive premiums from doctors and the time when they pay out malpractice settlements or verdicts. During this lag time, AIR argues, insurance companies gambled the premiums in the stock market. When the national economy began to suffer, so did insurance companies' portfolios and soon these insurance companies found themselves in financial hot water. AIR suggests that insurance companies are raising premiums not because they pay out too much money in jury verdicts, but because they lost premiums to a shrinking economy.
The question facing doctors, lawyers, policy-makers and insurance companies is whether or not limiting jury verdicts will stabilize insurance companies, doctors' premiums, and patients' medical costs. The insurance companies think it will; AIR thinks it won't.
The bottom line in all of this uproar is that our ability as patients to get the best healthcare available is compromised when doctors leave emergency and operating rooms in protest of ever-rising insurance premiums. This kind of healthcare system can't continue because too many patients will suffer.
Eventually, legislatures will have to face this dilemma. They will have to walk a fine line and create a three-fold compromise that is somewhere in the middle of all of the arguments presented: between protecting the patient's right to sue, enabling insurance companies to economically survive and protect doctors, and allowing doctors to serve their patients.
