Mo.'s insurance data don't support malpractice overhaul efforts

Monday, February 28, 2005

As former insurance director, I am mystified when the Missouri General Assembly's medical malpractice debate ignores the facts, even though the Missouri Department of Insurance has the nation's largest database.

The list of myths is long, but I can cull out the most offensive one: the myth that medical malpractice reform, as proposed in House Bill 393, will reduce the frivolous lawsuits in Missouri by trimming the non-economic damages cap to $250,000 from $579,000.

Department data show that this cutback would have affected 47 cases in 2003 with an average injury severity of 7.6 on a scale of 1 to 9 (death). That means these victims usually became quadriplegic or severely brain damaged, facing a fatal diagnosis or needing lifetime care because of preventable medical errors.

These cases are not frivolous by any stretch of anyone's imagination.

Under the bill, those 47 patients would have lost an average of $200,000-plus over their lifetimes for non-medical expenses -- like respite for caregivers and disability-related home renovations -- and as compensation for lost quality of life.

Malpractice insurance rates, however, would have dropped only 4 percent or less from the total savings if HB 393 had been in effect.

The House approved further penalizing victim even though:

* Missouri claims activity has remained level or headed downward for health-care providers for almost two decades.

* Payouts peaked in 2002 as insurers made good on claims for which they did not properly reserve during the price wars of the late 1990s. Payments dropped 21 percent in 2003, but rates didn't respond.

* Missouri has neither runaway juries nor skyrocketing awards. The state staff, while I was director, conducted a rigorous analysis on awards and found that all the average increase since 1990 was accounted for by medical inflation, wage inflation and the increasing severity of injuries for victims. HB 393 won't affect these underlying cost pressures.

Missouri likely will gain nothing in HB 393 for doctors, who are caught in a cash-flow squeeze by health-care funding sources and the insurance industry. One of the nation's (and Missouri's) largest insurers officially said that a $250,000 cap will reduce rates in Texas only 1 percent, even though that state had not limits before. Missouri has had a cap since 1986. If caps lowered rates, we wouldn't have a problem today.

With the malpractice industry's poor performance over the past 30 years, Missouri should look closely at adopting a system similar to the one in Kansas, which has rates about half those in Missouri. Kansas has a state-sponsored fund that wrings the private profits and risk out of coverage for larger awards. This fund should lower rates and provide greater market stability for Missouri physicians without the tragic costs imposed on future malpractice victims.

Scott Lakin of Jefferson City, Mo., is a former state representative and was director of the Missouri Department of Insurance from 2001 to January of this year.

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