September 22, 2003, 6:50 P.M.
Senator and Presidential candidate John Edwards has come under fire because, as a trial lawyer, he represented clients against doctors in medical malpractice cases, and was well known for his moving and passionate arguments in these cases.
Attacks on Edwards, and trial lawyers generally, are somewhat blunted by two Government Accounting Office reports released this summer that cast doubt on insurance industry and medical profession claims linking jury verdicts with rising health care and malpractice costs, and the exodus of health practitioners in some high-risk specialties such as maternity care from certain areas of the country.
The GAO report issued in June of 2003, entitled, “Medical Malpractice Insurance: Multiple Factors Have Contributed to Increased Insurance Rates,” verifies what trail lawyers have been saying all along: that rising insurance premiums and decreasing availability of healthcare are as much as the result of bad insurance company investments in a soft economy, as of jury awards. Malpractice premiums vary widely from place to place, and cannot be neatly tied to losses. The President, the American Medical Association, and the insurance industry blame trial lawyers and vilify John Edwards to frighten people into supporting their arguments at the polls. To suggest that capping awards will stem the tide of doctors leaving high risk specialties by lowering premiums is just wrong.
Another GAO report issued in August of 2003 is entitled, “Medical Malpractice: Implication of Rising Premiums on Access to Health Care,” and is the subject of an article in that appeared last week in the Washington Post. Sandra Boodman’s article entitled, “What Crisis?” examines this GAO report and features J. Robert Hunter, a former federal insurance administrator, who has studied the malpractice crisis issue for the Consumer Federation of America, an advocacy group, and whose study corroborates the conclusions of the GAO report:
“Hunter, an actuary, said that he oversaw the production of a study last year for a coalition of 100 consumer groups that tracked 30 years of malpractice payments and insurance premiums. The report concluded that there has been no malpractice "explosion" during the past three decades and that payments have been "extremely stable" since the mid-1980s.
Premiums paid by doctors, Hunter's study found, "do not correspond to increases or decreases in payouts," but "rise and fall in concert with the state of the economy. . . . Insurance companies raise rates when they are seeking ways to make up for declining interest rates and market-based investment losses."
That conclusion is similar to one reached by the GAO in a report released last June. Among the causes of the latest round of malpractice premium increases, the congressional investigators found, were insurers' losses in their investment portfolios, inadequate reserves to pay claims and artificially low rates set during the 1990s when many companies vied to attract policyholders.”
Mr. Hunter went on to explain:
“Every 10 years we hear the same thing: that all the doctors are leaving, that patients can’t get care; it’s sort of a ritualized dance. . .And the reason is always the same. The AMA and insurance companies blame the tort system.”
Despite the misinformation and an active campaign of disinformation, insurance company claims that jury awards cause high malpractice premiums and restrict access to health providers are simply not supported by fact. In spite of the conclusions of these two recent government reports, there are tort reform bills in legislatures all across the country. In Texas, a constitutional amendment has just been passed that caps pain and suffering damages at $750,000.
Critics will use tort reform to distract John Edwards from other campaign issues and I fear that he will ultimately be brought down by it. The most unfortunate aspect of this is that, while Edwards may fail in his presidential bid because of his profession, the insurance company executives who make millions of dollars regardless of the health of their companies, will continue to rake in their exorbitant salaries. The CEO of one of the largest medical malpractice insurers, St. Paul Companies, received almost $10 million in compensation in 2001. Setting a cap on the damages that victims of medical malpractice can collect will help keep these insurance executives in the style to which they have become accustomed, but will have no real effect on your access to health care.