Instalawyer linked to an interesting analysis concerning malpractice awards, and whether they should be capped or not. His take is that the awards haven't gone up as much as the AMA claims, and that you have to be careful which statistics you read. I followed up on the link he provided, and then dug a little deeper, and found out that you do indeed have to be careful which statistics you believe.
First, here's Instalawyer:
Here's an interesting fact sheet put together by Public Citizen, saying basically that you should be careful of which statistics you pay attention to. Their conclusion: the Federal Government's National Practitioner Data Bank, which reports 100% of the verdicts and settlements, reflects the median medical malpractice payment by a physician to a patient rose 35 percent from 1997 to 2001, from $100,000 to $135,000.A far cry from the hounds baying about "jackpot juries."
So the median malpractice payment rose an average 8.5% per year. Of course, inflation only rose an average of about 3% per year, so awards grew at almost triple the rate of inflation, which is certainly cause for concern.
The fact sheet has this to say:
While NPDB data show that the median medical malpractice payment rose 35 percent from 1997 to 2001 (an average of 8.5 percent a year), the average premium for single health insurance coverage increased 39 percent over that time period (9.5 percent a year). Payments for health care costs, which directly affect health insurance premiums, make up the lion’s share of most medical malpractice awards.
Isn't it interesting that most of the rise in cost of health insurance can be directly correlated with the increase in malpractice awards?
I was curious about what else I could find, so even though the fact sheet didn't provide a link to their source, the National Practitioner Data Book, I did a quick search, found it online, and looked up the 2001 Annual Report.
In Table 2, I found that the number of payments increased 12% over the same 5 year period, which seems good, until I looked at Table 3, which broke down the changes each year. Payments dropped in 1997 and 1998, but rose dramatically over the next three years, at an average of 4% per year.
It starts getting really good in Table 9 where we find that while the median is $135,00, the average payment is actually $270,854. See, the median is the middle payment, not the average payment. If you put all the awards in order from biggest to smallest, the median is the one in the middle. Half the awards were bigger, and half were smaller, but the median doesn't tell us by how much. For that, we need the mean, or average. In this case, the average payment is double the median, indicating that the awards are strongly skewed towards the high end.
This information presents a good argument for capping awards, rather than the other way around, as claimed by Public Citizen's fact sheet. First, the number of claims is growing; second the amount awarded per claim is growing at three times the rate of inflation; third, there is a strong correlation between the increase in malpractice claims and the increase in health insurance premiums; and fourth, the data shows that the awards are heavily skewed to the high end, indicating an inequitable distribution of award monies. By capping malpractice awards at a reasonable level, this inequity can be addressed.
Posted by Rich at February 20, 2003 12:06 AM | TrackBackThe cost of medical insurance is related to the cost of medical services. So is the cost of malpractice insurance.
What your figure actually show is that, as the cost of medical services go up , so should the cost of malpractice payouts. however, malpractice payouts have remained constant for the last few years.
The problem is, for unrelated reasons, insurance company profits have declined. why didn't you include this in your article?