Editorial – Insurance reform is real answer

Published on

The Charleston Gazette

The legislature is poised to commit malpractice of its own as it tries to solve the medical malpractice insurance crisis in the state by passing the insurance industry and doctors’ dream bill.

And it is no wonder that both like the bill as it’s shaping up. It gives them absolutely everything they’ve asked for.

But the entire bill is based on the false assumption that following the “California model,” by capping punitive damages and instituting other limitations on lawsuits will lead to lower malpractice insurance premiums.

As evidence, supporters point to a study by the federal Department of Health and Human Services that found that malpractice rates in California went up only 107 percent since the state passed a $ 250,000 cap on noneconomic damages, along with other “reforms” in 1975, while the national increase was about 500 percent.

Doctors would have legislators and others believe that this can all be attributed to malpractice tort changes. They conveniently forget that California passed Proposition 103 in 1988. That measure instituted insurance reform, not tort reform.

A decade after the Medical Injury Compensation Reform Act of 1975 was passed, malpractice rates in California had increased by nearly 30 percent, after adjusting for inflation. The rates during that period largely tracked the national average, according to a study by the Foundation for Taxpayer and Consumer Rights.

Only after Proposition 103 passed did malpractice insurance rates – and other insurance rates – start to decline in California while they increased nationwide.

The lesson for West Virginia should be clear: insurance reform, not tort reform, is the real answer.

What did Proposition 103 do? Well, for starters, it instituted an immediate rollback in insurance rates and billions of dollars in rebates. You would think insurance companies would have lost their shirts. But, in fact, net profits have gone up for California insurance companies. That’s because Proposition 103 disallowed unnecessary costs: excessive expenses, “bad-faith” lawsuit costs and

bloated executive salaries, to name a few.

The law also required insurers to open their books to justify rate increases. As Ralph Nader said in a 2001 column, “For the first time, insurers were provided with financial incentives for efficient performance, rather than simply being able to pass on costs (justified or not) to consumers.”

Here is the answer West Virginia has been looking for to insurance problems. The answer is not taking away consumer rights. The answer is to better regulate the insurance industry to provide real incentives for insurance companies to operate efficiently.

But that’s not what the Legislature is doing. Instead, it is capping noneconomic damages, which means, essentially, that the lives and health of poorer malpractice victims (the old and the young) will be worth less than those of wealthy victims who have lots of earning potential.

And, this is my favorite: the House has even decided to increase the bankruptcy protection for doctors, even though no doctor has ever been forced into bankruptcy by a malpractice claim. While ordinary West Virginians only get a $25,000 property exemption (essentially to help protect those in bankruptcy from losing their homes), doctors get a $ 250,000 property exemption.

Now, if doctors are hurting as bad as they say because of malpractice premiums, how can they afford such expensive homes? And where is the fairness in singling out doctors for such special protection under the law?

Come to think of it, why aren’t those people who howl in outrage at the thought of giving homosexuals “special protection” by including them in hate crimes and discrimination laws going berserk against this much clearer instance of special protection granted to a specific group?

Finally, the House is doing absolutely nothing about the real root of the problem, which is medical malpractice itself.

According to a study by Public Citizen, West Virginia has the second highest percentage of doctors who have lost or settled two or more malpractice cases. These repeat offenders are responsible for a large percentage of malpractice verdicts and settlements.

Ten percent of the doctors who have been sued in this state are responsible for 55 percent of the verdicts and settlements. Clearly, cracking down on bad doctors and instituting procedures to help reduce the number of medical errors would make a huge difference in the amount of money paid to malpractice victims by reducing the number of victims.

Insurance reform is the right prescription here, along with efforts to reduce the number of patients hurt by medical errors.

I doubt the legislators will be able to get that message, though, with the current stampede toward tort reform.


Dan Radmacher is the Gazette’s editorial page editor. He can be reached at 348-5150, or by e-mail at danrad@wv gazette.com.

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