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The Myth of Skyrocketing Medical Malpractice Insurance Premiums

By John C. Whitfield | 

Being a trial attorney for over 30 years, I have represented the victims of negligence in a litany of horrific situations, such as coal mine accidents, truck and vehicular accidents, and medical errors. One of the prevailing themes I hear from those that oppose such efforts is the myth that the actions we bring to assist those that cannot assist themselves cause the insurance premiums of all to rise. This unfounded complaint is especially true in the medical negligence cases that I have prosecuted. A simple review of the statistics  reveal that the alleged “fact” of skyrocketing insurance premiums is actually a myth.

The National Association of Insurance Commissioners just updated its statistics on direct premiums earned, direct losses incurred, direct defense and cost containment incurred, and loss and direct defense cost containment expenses ratios.  The direct losses incurred have dropped from a high of $8,459,389,539 in 2003 to $3,655,161,296 in 2011.  Without factoring in inflation, that represents a drop of a whopping 56.8 percent during those eight years.  The URL is: http://www.naic.org/documents/research_stats_medical_malpractice.pdf.

Additionally, the aggregate direct premiums earned, as shown on the page above, have decreased five years in a row, from $12,167,900,762 in 2006 to $10,296,112,512 in 2011.  Thus, malpractice insurance premiums are not “skyrocketing” as people sometimes claim.  Despite the lower premiums, the loss ratios have fallen significantly. From a high of 126.83 percent in 2001, the last four years have ranged from 55.66 percent to 51.02 percent.

The payments reported to the National Practitioner Data Bank from 2001 through 2011 paint a similar picture, although the NPDB only includes payments incurred because of doctor, not hospital, negligence, so the numbers are somewhat lower than the NAIC numbers.  The NPDB reports payments in 2004 of $4,397,780,000 and in 2011 of $2,820,910,000, a drop of 35.8 percent.  The URL for the NPDB is: http://www.npdb-hipdb.hrsa.gov/resources/npdbstats/npdbTableUS.jsp#Table2.

The NPDB statistics also show the number of payments for doctor negligence has declined ten years in a row.  The numbers are:

2001       15,925

2002       14,978

2003       14,930

2004       14,304

2005       13,396

2006       11,677

2007       11,010

2008       10,533

2009       10,440

2010       9,458

2011       8,450

The number of payments in 2011 represents a reduction of 47 percent from the number of payments in 2001.

When you consider that there are approximately 1,503,323 people who die or are injured annually as a result of medical errors [The $17.1 Billion Problem: The Annual Cost of Measurable Medical Errors, Health Affairs, April 2011, 30:4], the number of people actually compensated is miniscule.

Victims of medical negligence should have their day in court, and not be burdened with lobbying efforts of those groups that have nothing but a monetary incentive to distort the truth.

(Thanks to AAJ member J. Michael End End, Hierseman and Crain, LLC 600 N. Broadway, Suite 300 Milwaukee, Wisconsin 53202 for his research on this issue).