Fun with Medical Malpractice

OK, it's not fun. But we have been seeing a lot of heated rhetoric on the topic for the past couple of years, and now that the Wisconsin Supreme Court has weighed in incorrectly, I will join the chorus.

Medical malpractice occurs when a physician blows a call so badly that his or her colleagues are aghast. Patient is damaged and sues (or the patient dies, and the estate sues) for an amount of money that approximates the value of the patient's health (or life)--usually a pretty steep amount, in the case of death. This is as close as the patient can get to "justice," so it makes sense.

In most states, physicians are required to have insurance against malpractice. In recent years, jury awards for damage to patients have been rising dramatically. Why? Maybe the big money in the 90s dot-com boom made jurors add zeroes to the ends of numbers. Maybe it is just psychological inflation. We don't know precisely.

At the same time that the zeroes have been climbing, so have the premiums for physicians' malpractice insurance. (To get a flavor for annual costs, multiply your auto insurance premium for your nicest car by about 100. That should be in the ballpark for a general practitioner (meaning low-risk). For neurosurgeons and obstetricians, multiply by 250.) Then consider this: It has not been uncommon to see 20 percent annual increases in some places.

Why the increases in premiums? Well, that's what all the venom is about. Physicians and insurers tend to point to the rising jury verdicts and the greed of plaintiffs' lawyers who win them. Plaintiff's lawyers and consumer groups tend to point to insurers' greed and bad investment decisions.

My impression is that this is a many-headed hydra. I do not have a full solution to the problem (socialized medicine would bring problems of its own), but I do agree that the increase in jury awards is a contributing factor. I rely on the General Accounting Office, which issued a report on the problem in 2003.

Oddly enough, the Wisconsin Supreme Court cited the GAO report for the proposition that the increase in jury awards was not a definite cause of the increase in malpractice premiums:

¶124 One General Accounting Office study concluded that malpractice claims payments against all physicians between 1996 and 2002 tended to be lower and grew less rapidly in states with noneconomic damage caps.[143] The Office's ultimate conclusion was that these averages obscured wide variation between states and within a state from year to year.[144] The study's malpractice claims payments in cap and non-cap states therefore do not provide a rational basis for the connection between the cap and lower premiums.

While I agree that the report was inconclusive in many respects, I read it to say that the two shared at least a partial cause-effect relationship. That, my friends, is a rational basis.

Although I am not technically on the Wisconsin Supreme Court, I respectfully dissent.