Pennsylvania's doctors, especially high-risk surgeons and physicians from the east who pay higher medical malpractice rates, worry that a state-mandated change in insurance could result in an overnight 25 percent increase in their premiums.
Any doctor who does the majority of his work in Pennsylvania is required by state law to carry at least $1 million in liability insurance. The first $500,000 is covered by the doctors through the private insurance market. The next $500,000 in coverage is purchased through the state's MCARE program, which charges doctors an assessment, then pays claims out of that group fund.
But the state Department of Insurance is mulling a change that would require doctors to purchase the first $750,000 on the open market -- either through a private insurer, or through doctor-run organizations known as risk-retention groups and insurance exchanges.
The hope is that the state has recovered from what physicians groups billed a medical-malpractice crisis three years ago, and that there are enough insurers underwriting enough products to drive down costs organically.
Doctors say that's not the case yet.
"I believe that it could destabilize the medical malpractice marketplace," said Dr. Lewis Sharps, a spinal surgeon from Chester County, "and reactivate the crisis we faced from 2002 to 2004."
Dr. Sharps has a unique vantage point: In addition to being a high-risk surgeon, he's also the CEO of a medical insurer called the Positive Physicians Insurance Exchange.
His company paid for an actuarial analysis of what might happen if the shift takes place -- an orthopedic surgeon whose med-mal insurance was $60,000 annually would see the payment jump to $75,000.
"It's a very significant concern," Dr. Sharps said. "Many physicians don't even know this is going on."
What's going on is this: The Insurance Department is analyzing the state's marketplace to determine whether there's enough underwriting capacity to shift med-mal liability away from the state and into the private market. The shift, as a side effect, could save Pennsylvania about $70 million of the roughly $120 million that is now spent on MCARE abatements, which are financed by cigarette tax money.
High-risk specialists get full abatements in their MCARE assessments, meaning the extra $500,000 in coverage costs them nothing, wiping out what otherwise would be a bill of tens of thousands of dollars. Lower-risk doctors get a lesser abatement.
The insurance commissioner is supposed to issue a decision by this week regarding the shift, and changes, if they are authorized, would go into effect in January, without legislative authorization.
By law, the insurance commissioner reviews the marketplace capacity every two years -- the last time this happened, in 2005, then-Commissioner Diane Koken announced that there would be no change in the 50-50 split.
Doctors fear that this year could be different, because two years of relative calm on the med-mal front have led to more stable rates and new carriers. In the last three years, for example, about 30 new carriers have begun offering services in the state -- though that's not necessarily reflective of a fully healthy market, since most of those carriers do only a sliver of business here.
State Rep. Todd Eachus, D-Luzerne County, viewed as an ally of the medical community, said it's too early for the Insurance Department to declare the marketplace healed. That's because the full effects of the raft of med-mal reforms enacted in 2004 won't be known for another year or two.
"I really don't want anyone meddling with the Legislature's work at this point," the representative said. "It was a difficult debate. There was a lot of finger-pointing" among legislators, lobbyists, the medical community and attorneys. Mr. Eachus has sent a letter to the governor, asking him to delay the shift.
Doctors also hope to prod the state Legislature and the governor to reauthorize the state's MCARE abatement program, which expires annually. Much of the would-be cost of the state's insurance assessment is defrayed by the abatement fund.
Historically, renewal hasn't been a major political issue, in large part because of the persistence of the state's many doctors and surgeons' lobbying groups. In recent years, they've sought reductions in their medical malpractice premiums, a medical school loan repayment program, caps on "pain and suffering" jury awards and a change in litigation rules forbidding "jury shopping" -- the practice of moving a case from county to county in search of a jury more sympathetic to a given malpractice plaintiff.
Some legislators have complained of "doctor fatigue," while many doctors say the state hasn't gone far enough to make Pennsylvania an attractive place in which to practice, thanks to high med-mal rates and lower-than-average service reimbursements from insurance companies.
Bill Toland can be reached at firstname.lastname@example.org or 412-263-2625.