Medical Malpractice Insurance Industry Profits Soar Despite Claims Decline

A new study by Americans for Insurance Reform (AIR) reveals that medical malpractice insurance premiums and claims have significantly decreased in recent years, while the insurance industry is enjoying remarkable profits. The study, True Risk: Medical Liability, Malpractice Insurance and Health Care, conducted by Gillian Cassell-Stiga, Joanne Doroshow, and J. Robert Hunter, found that claims have dropped by 45 percent since 2000, and premiums are at their lowest point in 30 years when adjusted for inflation. The report also shows that states that have implemented severe medical malpractice tort restrictions have seen rate changes similar to those that have not adopted such measures. Furthermore, the study concludes that medical malpractice claims and premiums have virtually no impact on overall health care costs, which is less than one-half of one percent of total health care expenditures.

Key Takeaways:

• Medical malpractice insurance premiums have dropped significantly in recent years, with the lowest point in 30 years when adjusted for inflation.
• Claims have decreased by 45 percent since 2000, with premiums being more affected by the economic cycle than by actual claims.
• Medical malpractice insurer profits are higher than the rest of the property casualty industry, due to higher-than-expected claims income.
• States with severe medical malpractice tort restrictions have seen rate changes similar to those without such measures.
• Medical malpractice claims and premiums have minimal impact on the cost of health care, accounting for less than one-half of one percent of overall health care expenditures.
• If Congress eliminated all medical malpractice lawsuits, including legitimate cases, overall health care costs would hardly change.

Statistics:

• Medical malpractice premiums are at their lowest point in 30 years when adjusted for inflation.
• Claims have dropped by 45 percent since 2000.
• Medical malpractice insurer profits are higher than the rest of the property casualty industry, with profits exceeding 6-7% year-over-year.
• Medical malpractice claims account for only one-fifth of one percent of overall health care costs.
• If Congress eliminated all medical malpractice lawsuits, including legitimate cases, overall health care costs would increase by less than 0.2%.

Sources:

• Americans for Insurance Reform. True Risk: Medical Liability, Malpractice Insurance and Health Care. (Report).
• "Medical Malpractice: A New Study Finds Coverage." NewsRx.com. Science Letter.
• Hunter, J. R. Director, Consumer Federation of America. (As cited in Americans for Insurance Reform).