Consumer Advocates Recommend Insurance Regulation, Not Damage Caps, To End Malpractice “Crisis”

Santa Monica, CA — Consumer and patient advocates called on President Bush to scrutinize the financial ties between state medical societies and the medical malpractice insurers they affiliate with, as he addresses the medical malpractice “crisis” at an American Medical Association convention today. The non-profit Foundation for Taxpayer and Consumer Rights (FTCR) expressed concern that state medical societies, while professing concern for doctors, have undue interest in the financial health of malpractice insurers.

FTCR noted that the Medical Society of New Jersey is one of the largest shareholders in the MIIX Insurance Company, which, until recently, insured 37% of the state’s doctors. MIIX recently exacerbated New Jersey’s standing as a “crisis” state when its Medical Society-dominated board of directors put the company’s finances on the rocks with an aggressive growth strategy which included untimely expansion into other states.

“The Medical Society of New Jersey promotes insurer, not doctor, interests. Their close ties to the industry don’t pass the smell test,” said Carmen Balber, consumer advocate with FTCR. “President Bush should call for an immediate investigation into conflicts within the rest of the state doctors’ associations which continually fail to distinguish legislative reforms to lower doctors’ premiums from proposals that will only increase insurer profits.”

President Bush should advocate strong insurance reform, not limits on victims’ rights, to stabilize doctors’ increasing malpractice premiums, said FTCR. Industry data in the group’s recent report on California medical malpractice premiums prove that Proposition 103, a 1988 voter-approved insurance reform initiative, and not the state’s malpractice cap law, lowered malpractice premiums for physicians in that state. The report is available at FTCR’s website.

“President Bush‘s proposal to solve rising insurance rates with malpractice caps mentions neither insurance nor rates,” said Balber. “Limits on insurance premiums, not the rights and compensation of innocent victims, will keep malpractice costs down for the nation’s doctors.”

FTCR suggested that Bush and policymakers look to the experience of California, where insurance reform with mandatory rate reductions and stringent, on-going regulation of malpractice insurance rates lowered premiums for doctors, while malpractice caps and other restrictions on victims failed to provide doctors the relief they sought. FTCR’s national recipe for reform will:

• Require medical malpractice insurers to provide an automatic 20% discount to good doctors
  

• Revoke insurance companies’ federal exemption from anti-trust laws so they must compete
  

• Mandate a 20% rate rollback and rate freeze
  

• Require state departments of insurance to approve all malpractice rate increases before rates can go into effect, and allow the public challenges of rate changes