Experts Say Medical Liability Rates Could Increase

Medical malpractice insurance rates may begin to creep up over the next several years, as changes take hold in healthcare.

• Several factors, such as healthcare market consolidation and baby boomers joining Medicare, could result in higher liability coverage costs.
• Medical liability insurance rates seem to have held steady the past few years.  But that could soon change.
• Higher insurance costs for providers would have to be paid for somehow — in higher costs of care, reduced availability of riskier services or fewer doctors as more head for the door.
• That means now is the time to take steps to counteract the things pressuring malpractice insurance rates upward.

A number of potential drivers could send liability coverage costs northward.

• Healthcare consolidation, with more doctors closing private practices and joining hospital staffs, could lead to insurance rates rising.  So far, this has been buffered somewhat by self-insured hospitals covering employee doctors.  But at a certain point, claims and losses by commercial insurers will likely increase.
• The large postwar generation will continue to get older and need more health services.  Greater utilization typically leads to a rise in malpractice claims.
• A growing senior citizen cohort plus more Americans becoming insured as a result of health reform translates into more patients needing more medical care.  Simply as a proportion, each provider will serve a larger patient population.  The sheer increase in demand relative to provider supply is almost guaranteed to mean more liability cases.
• State-level tort reforms will probably face challenges in court or in the legislature.  Seven states have reversed their caps on monetary damages.
• Damages caps, shorter statutes of limitations and attorneys’ fees caps are targeted by the plaintiffs’ bar.  If attacks on state tort reforms continue to succeed, expect more lawyers filing more lawsuits against healthcare defendants.  This will send liability coverage costs higher.
• The accounting and consulting firm PricewaterhouseCoopers made the estimates about medical liability premium rate directions.

Addressing these potential liability insurance cost drivers now would help mitigate the damage.

• Moving forward at the federal level with medical liability reforms would contribute mightily to risk reduction.  Bipartisan solutions, such as liability safe harbors for using health IT or for following clinical best practices, hold much promise.
• Apology laws like the one Pennsylvania recently enacted are also constructive.  These allow providers to apologize to patients who had an adverse event, without admitting legal liability.
•  Encouraging more young people to go into medicine or the life sciences would help meet the demand that more patients will cause.  Allowing nonphysician providers to perform more services can help meet growing demand.  Also, finding ways to keep mature doctors and other providers in their practices for more years could stem the exit of experience.

As things change in the medical market, they affect the rate of litigious behavior.  It would be unfortunate not to pay attention to the changes we can already see and prepare for them now.  While meritorious cases deserve their day in court, we shouldn’t allow predictable shifts to become incentives for runaway litigation.