‘COMMERCIAL LINE’ GETS LESS ATTENTION
FRANKFORT, KY: Critics say the Kentucky Insurance Department has, until now, gone AWOL from the battle over medical malpractice insurance.
Kentucky doctors have complained for several years about ruinous insurance premiums. But only three weeks ago did Insurance Commissioner Janie Miller order insurers in Kentucky to disclose their premiums for malpractice coverage.
The deadline is next month, as the legislature adjourns. So the General Assembly’s debate over malpractice premiums will be based on anecdotes and guesswork, not hard facts. Nobody really knows how much insurers are charging, much less why prices are rising.
“We should have done this sooner,” said Sen. Tom Buford, R-Nicholasville, chairman of the Senate Banking and Insurance Committee. “Janie is running a little behind on this.”
Some other states, like Ohio, Illinois and Texas, track malpractice premiums.
A few, like California, regulate the market by reviewing proposed increases in malpractice premiums and demanding that insurers justify them. In December, California’s second-largest malpractice insurer withdrew a proposed 16-percent premium increase after protests were filed with the state insurance department.
Carmen Balber, a consumer advocate at the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif., said that policy has helped keep insurers from indiscriminately raising rates.
“Groups like us can challenge them, make them bring their reasoning out into the daylight,” Balber said. “That has really helped us keep rates down in California, much more than capping damages ever did.”
In a recent interview, Miller said she needed to study the malpractice problem before she plunged into the controversy and ordered premium disclosure.
Miller said she didn’t act sooner because malpractice insurance is a “commercial line,” compared to “personal lines,” like home or auto insurance. The Insurance Department requires premium disclosure for personal lines, but it assumes commercial buyers are more sophisticated and need less regulatory protection, she said.
The state now plans to follow malpractice premiums because several insurers have left the field, leaving doctors and hospitals scrambling for coverage; premiums apparently are skyrocketing, Miller said.
Miller’s predecessor, George Nichols III, quit two years ago for an executive post at New York Life Insurance Co., which sells life and health insurance.
Nichols said he heard grumbling about malpractice premiums during the end of his tenure. But the problem sounded less dire at the time, he said. And insurance regulators who act too aggressively to limit premiums can chase insurers out of the market, he warned.
Kentucky watched aghast in the 1990s as health-care companies fled the state, complaining of excessive regulations, Nichols said.
“Hindsight is 20/20,” Nichols said, speaking recently from New York. “To people who say, ‘You should have done something like this a long time ago,’ I say my philosophy is one of balance. You shouldn’t underregulate business, but you shouldn’t overregulate it, either.”