Effects of Healthcare Reform on Medical Malpractice Insurance & Claims

Posted by | February 21, 2012 | No Comments

According to the Insurance Information Institute (2011), although “premiums are now stable and the frequency and severity of claims has moderated, some observers see the beginning of a reversal”.  A 2010 study by Conning notes that “medical malpractice profitability cycle has peaked…a number of factors will challenge insurers and possibly lead to higher losses over the next few years”.  These factors include:

  • Outpacing other tort areas, costs to defend/settle medical malpractice cases are continually rising
  • Favorable tort reform measures in some states are being and/or have been reversed
  • Physician shortages in some areas/regions
  • A largely unhealthy and uninsured population
  • The pending influx of some 32 million additional policyholders as a result of the new healthcare law

Extrapolating from the factors noted by the Coning Study, observations can be made that…

  • States with the least healthy population will, most likely, seek medical care in larger numbers as a result receiving healthcare benefits under the new law.
  • States with the highest percentage of uninsured individuals will, most likely, see the highest influx of newly “insured” patients as a result of the new healthcare law.
  • Physicians in the least physician-dense states may be stretched to increase their practice to accommodate the influx of newly “insured” patients.

Combining these observations it could be reasoned that, in a “perfect storm”, (where an area ranks among the least physician-dense, and the most unhealthy and uninsured population), physician practices overrun with a great influx of newly “insured” and unhealthy patients would naturally see an increase in the risk and instance of malpractice claims.  Following logically, an increase in claims/lawsuits coupled with continuing challenges to tort reform and the rising costs to defend such claims would ultimately result in rising Malpractice Insurance Premiums and a possible physician exodus to avoid the risks and costs involved with practicing in these areas.

The Affordable Care Act, which passed in 2010, could surely never have such a negative effect on the delivery of healthcare…Only in such a “perfect storm” scenario could that happen and that doesn’t exist anywhere in the U.S. does it?

Mississippi –           #1 Most Unhealthy*** / #3 Most Uninsured* / #3 Least Physician-Dense**
Oklahoma –           #3 Most Unhealthy*** / #6 Most Uninsured* / #2 Least Physician-Dense**
Arkansas –              #4 Most Unhealthy*** / #14 Most Uninsured* / #7 Least Physician-Dense**
Texas –                   #7 Most Unhealty***/ #1 Most Uninsured* / #10 Least Physician-Dense**

*-   Gallup-Healthways Well-Being Index
**-  Physicians Practice – Best States to Practice Report
***- American’s Health Rankings, by the United Health Foundation, American Public Health Association and the Partnership for Prevention

To contact the author, call 800-457-7790 and ask for Rob Cash.

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