21 February 2006

Quick note on Malpractice deal in WA State

Back from skiing Mt Hood. Had fun and managed -- barely -- to avoid injuring myself. I'm too tired today to really blog in detail but I can't help commenting on a major development in my own back yard -- Washington doctors and lawyers have reached a negotiated agreement on some elements of malpractice reform. Read more here or here.

A quick review of the proposal is encouraging, though not overwhelming. No caps, nor much in the way of innovative alternative dispute resolution. Doctors would have the ability to apologize to the patient without fear of that being used against them in court. That does have some potential to reduce needless liability. It also requires pretrial mediation and establishes a voluntary binding arbitration system. Nice, but kind of toothless. It allows juries to hear whether a victim has already been compensated for their injury from another source. It does not allow partial payment of judgments or limit the use of expert testimony. It does require more comprehensive data collection on the part of the OIC, about five years too late.

I'm a little discouraged that this may foster the mistaken impression that the crisis is over, but any progess is better than none, I guess. I am pleased that Washington Governor Gregoire has shown some leadership in brokering this compromise. It leaves me wondering what the next step is in this fight. I don't think anybody expects this to be the final word on this matter.

Oh, and by the way, we just got our 2006 malpractice renewal. It's down about 15% from last year, leaving us up only 400% since 2002. Progress.

3 comments:

Carlos said...

I haven't looked at the numbers or the legal issues, but what is involved in having a group self-insure? I know that we like to blame the high cost of malpractice on ambulance-chasing lawyers, but clearly that is not the whole story. Why did your premiums go up so much in 3-4 years? Did you have a settlement go against you? I doubt that insurance companies paid more in malpractice lawsuits in WA during those years (see this Texas example) so any meaningful Tort reform has to be accompanied by medical malpractice insurance reform. Alternatively, when premiums go up so much in a short amount of time, groups may find it more economical to self-insure.

Anonymous said...

Only doctors and lawyers are arrogant enough to think that they can lower prices set by another party altogether.

Why are the insurers not a part of talks to lower insurance rates?

shadowfax said...

Anon:
The theory is that rates are rational and driven by real-world liability experience. Thus, if we reduce our liability (either by better quality of practice or by regulatory reform) our rates should go down. If the insurers were basing rates solely on actuarial data, that should work.

If the rates are being "fixed" by insurers, as I suspect may be the case, I suspect that "talking" to them would be pretty pointless, and that regulatory reform of the insurance industry is necessary.

Which dovetails nicely with Carlos' point. A lot of people who know more about this than I do say that a large part of the spike in malpractice premiums was driven by the insurers' need to rebuild their cash reserves after the market tanked in 2001. That certainly makes sense to me. But much as I would like to make the insurers the "bad guys," it needs to be recognized that the spike in rates was accompanied by a couple of insurers going bankrupt, and several others pulling out of the med-mal market altogether. Not the sign of an industry which is profiteering excessively. It is also true that the average and median payouts have increased dramatically, and that the frequency of >$1 Million payouts has increased. So it's likely a combination of both factors.

And the Texas study Carlos referenced was one of a number of contradictory studies. For some reason good data on this topic is pretty hard to come by. One good thing about the Washington State compromise is that it will generate some actual data to track the problem.