The Palm Beach Post
Floridians are prone to an unhealthy admiration of Californians.
We deceive ourselves into believing that the Golden State has found solutions for all the problems that confound the Sunshine State. We reason that what works in California has to work here.
So theme-park theory, environmental lawmaking, highway design, education reforms and great social experiments that originated on the Left Coast invariably make it to the Peninsula. Too often, Floridians embrace bad ideas with blind enthusiasm just because they came out of the California laboratory.
Since Florida faces a crisis over medical malpractice insurance, it was inevitable that a California model would surface as the ideal solution. A task force appointed by Gov. Bush to study doctors’ soaring insurance premiums reported in December that Florida should follow California’s lead and cap lawsuit damages. Florida’s doctors and hospitals heartily concurred.
Give us the California Model, they said, and we’ll be just fine.
Naturally, the insurance companies agreed. They said outrageous malpractice lawsuits were driving them out of the state.
Give us the California cap – limit noneconomic damage awards at $250,000 – and the Florida system will work just fine, insurance companies said.
President Bush climbed aboard last month. He endorsed the California Model for the nation.
“We’re a litigious society,” he said. “There are too many lawsuits in America, and there are too many lawsuits filed against doctors and hospitals without merit.”
By capping pain and suffering damages, President Bush said, physicians’ malpractice premiums will fall to reasonable levels. After all, according to the California Medical Association, Los Angeles doctors are paying about $42,000 a year less in premiums than their counterparts in Florida, Michigan and New York.
All hail the California Model!
But are we really sure exactly what that model is and how well it has worked?
California limited noneconomic damages in 1975 with approval of the Medical Injury Compensation Reform Act. The cap was set at $250,000, and it remains there today. Twenty-eight years ago, a quarter-million dollars approximated 20 years of earnings for the average American. Today, it is not half that. Shouldn’t somebody wonder about a system that values 1975 dollars and 2003 dollars the same?
But never mind that. The most important issue for Floridians is whether the cap has been effective in reducing physicians’ insurance premiums. Californians quickly found that it was not. Quite the contrary, rates continued to soar after the caps took effect.
According to the Foundation for Taxpayer and Consumer Rights, a California watchdog group, the state’s malpractice premiums rose 175 percent in the decade after the cap began. In 1988, faced with a crisis similar to Florida’s today, California voters passed Proposition 103, a landmark insurance reform initiative that brought radical changes to everything but life insurance and workers compensation. The referendum temporarily froze malpractice premiums and also required a 20 percent across-the-board rollback on rates. Only then did the system stabilize.
Between 1988 and 2000, because of Prop 103, California malpractice premiums fell 8 percent, while the nation’s went up 25 percent. Adjusted for inflation, the state’s premiums are down 35 percent since the legislation passed.
President Bush, the governor’s panel, Florida’s physicians, hospitals and insurance companies omit references to Proposition 103 when touting the effectiveness of noneconomic caps. In fact, nothing about California’s experience suggests that limiting jury awards will reduce malpractice premiums, or even slow their rate of increase.
What did work was capping premiums. Insurance companies that had threatened to pull out of the state if regulations passed did not. Physicians who had threatened to move elsewhere stayed. Predictions of a meltdown from the consumer backlash proved exaggerated.
Floridians who point to the California Model as a solution to the malpractice crisis should be careful where their fingers aim. This is no time to copy the wrong thing.
Dan Moffett is an editorial writer for The Palm Beach Post. His e-mail address is [email protected]