Study: Real Cost of Mass. Malpractice Premiums Has Declined

5/14/2008

Reports of skyrocketing medical malpractice premiums in Massachusetts are flawed, according to a Suffolk University Law School study that found Bay State physicians actually saw their inflation-adjusted malpractice premiums drop between 1990 and 2005.

The new study, published in the May/June issue of the journal Health Affairs, raises serious questions about claims that Massachusetts doctors are facing a medical malpractice premium crisis that threatens the viability of medical practice in the Bay State.

Real cost of premiums declines

Massachusetts has the fourth-highest median malpractice settlement payments in the nation, and therefore should have the fourth-highest premiums. Yet, when adjusted for inflation, Bay State physicians’ malpractice premiums were lower in 2005 than in 1990 in nearly all cases. The study -- which provides the most comprehensive analysis of premiums to date -- clashes with popular perceptions and assumptions underlying legislative proposals to cap damages awards.

Suffolk University Law School researchers Marc Rodwin and colleagues analyzed malpractice premiums from 1975 to 2005 using data from the state-regulated mutual insurer known as Pro-Mutual. In 2005, malpractice premiums were $17,810 for the coverage level and policy type that physicians most frequently purchased, compared with $17,907 in 1990. Despite premium increases since 1995 or 2000 for all physicians, premiums were still lower in 2005 than 1990, when they reached a 30-year peak. Mean premiums increased only in three specialties comprising 4 percent of physicians: obstetrics, neurology and orthopedists performing spinal surgery.

Variations within practice specialties

The study furthermore documents growing differences among premiums paid within each practice specialty since 1990. That’s when insurers began to adjust rates for each practice specialty by discounting low-risk physicians and surcharging those with high risks. By 2005, there was a threefold difference in premiums for physicians within OB-GYN, the highest-risk specialty, as a result of rate discounts and surcharges based on an individual physician’s risk factors. As a result, although mean OB-GYN premiums increased significantly since 1990, nearly one-third of physicians in OB-GYN paid lower premiums in 2005 than in 1990.

The authors note that premiums for OB-GYN are higher than for most other physicians because infants injured in birth sometimes require lifelong custodial care, which is very expensive.  They therefore recommend that patient safety and quality efforts should focus on OB-GYN and the two other high-risk specialties to reduce injuries.  When similar efforts were undertaken in anesthesiology in the 1990s, injuries fell dramatically, and premiums did as well.

Compensation alternatives

The authors also propose alternative means to compensate injuries.  For infants injured in birth they recommend a no-fault compensation system such as those used in Virginia and Florida.  Alternatively they suggest shifting liability from physicians to hospitals for all injuries that occur in hospitals.  Both proposals would reduce the malpractice premiums for high-risk physicians while still compensating patients.

 

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