Earlier this month, Gov.-elect Ed Rendell proposed a short-term fix to the "malpractice insurance crisis." He was responding to Pennsylvania physicians' complaints about the high cost of medical malpractice insurance and well-publicized threats of some surgeons in the Scranton area to restrict their practices or to leave practice at year's end (the threats were not carried out).
| |  |
| | | Nathan Hershey is professor of health law at the University of Pittsburgh Graduate School of Public Health (hershey@pitt.edu ). | |
| | |
Pennsylvania physicians are required by law to purchase $500,000 private malpractice insurance coverage and pay a premium surcharge for additional coverage to a state-operated catastrophe loss fund. Rendell's proposed stopgap -- which is unlikely to be adopted in its present form -- is to take hundreds of millions from health insurers that apparently have handled their finances well, and built their reserves, and use them to subsidize physicians' premiums for their catastrophe loss fund coverage.
Evidently Rendell recognizes that something needs to be done. The most critical question is how to describe the problem that is evidenced by the sizable increase in malpractice insurance premiums from the previous year.
Insurers and those they insure see the problem as the cost of insurance coverage. They support any measures that will reduce the payments insurers must make on behalf of insured physicians, by virtue of judgments or settlements, when patients suffer injury because of substandard care in the provision of health services. Typical of the measures urged to control premium costs are limits on recovery for pain and suffering, and on attorneys' contingent fees.
Others see the problem as one to be addressed mainly by injury prevention. Several highly regarded studies, including one by the Institute of Medicine, conclude that many injuries are caused by medical errors, and that continuous redesign of health services delivery processes will bring safe, effective and efficient care.
A Dec. 13 Post-Gazette article (reprinted from The Philadelphia Inquirer) concerning a national report about medical errors quotes a key health care foundation chief, Drew Altman of the Henry J. Kaiser Family Foundation: "This survey provides strong documentation that medical errors represent a problem that affects a significant number of people." Tinkering with liability rules and imposing limits on recovery serve mainly to divert attention from more complicated issues in reducing injuries.
Still others see the problem as a financing matter. Insurance premiums are invested, and the return on investment -- the relative success of the insurers' investment programs -- is crucial to the insurers' financial condition. When the economy was doing well, the investment returns (income and asset appreciation) were excellent. Today return on investment is much poorer, reserves are down, and insurers assert the need to replenish their coffers by raising premiums.
During a previous malpractice insurance crisis (1979-80), an insurance industry publication reported that while "medical malpractice leads all the other lines of insurance business in the extent of underwriting losses, despite these disastrous underwriting results, the insurance industry is in its best financial shape since 1973 . . . because investment income not only wiped out the underwriting loss but helped generate a $6 billion gain in surplus." Insurers often compete for business by setting unrealistically low premiums to get money to invest when investment returns are good.
Hardly ever mentioned in discussions of malpractice insurance crises is the continuing increase in the volume of health services being rendered, partly as the result of technological advances.
The greater the number of procedures performed -- diagnostic and therapeutic -- for a patient, the greater the number of opportunities for something to go wrong, and for patient injury to occur, sometimes because of error. Even if the percentage of poor results drops, the number of such results will increase on a random basis, as services continue to increase.
Related to the increase in the volume of health services rendered is the fact that, for complex patient problems and the procedures necessary to diagnose and treat them, increased numbers of practitioners often will become involved in a patient's care. If patient harm occurs and malpractice is alleged, there will be multiple defendants, each of whose insurers will have to establish a reserve, and provide a legal defense for those it insures.
The Pennsylvania malpractice insurance crisis is not unique. In West Virginia some physicians have cut their services, necessitating transfers of some patients out of state for needed surgery.
Other states are having their crises, too. It is time now also to recognize that the health services industry has trumpeted its successes to such an extent that much of the public assumes that anything less than complete success in treatment means someone providing care has messed up.
It is in the public's interest for the new governor and the Legislature to not drop the subject once some short-term measure is adopted.
Rather, they need to recognize there is a multidimensional problem that, while not completely amenable to a state solution, requires serious and careful attention by people who understand the complexity of the problem.
E-mail this story 
