NCPA - National Center for Policy Analysis


June 8, 2007

A report by David Hendricks in the San Antonio Express-News offered hard data on the changes that have occurred in Texas since voters in 2003 gave the thumbs up to a state proposition capping lawsuit awards in medical malpractice cases.

In 2003, four insurers offered medical malpractice policies, now 30 insurers do.  Insurance companies are flocking to Texas because now they can put a numeric value on the risk of doing business in Texas, something that was not possible when the sky was the limit for juries.  Assessing risks helps assure profits for insurance companies.  As more insurance companies entered Texas, rates have dropped even further because of competition, says Hendricks.

Rates have fallen an average of 21.3 percent, and up to 41 percent at one insurance company, says former state Rep. Joe Nixon, a Houston trial lawyer who helped sponsor passage of Proposition 12.  According to figures given to Nixon by the state's largest insurer, Texas Medical Liability Trust:

  • An internal medicine doctor in Houston paid $18,507 for malpractice insurance in 2003 but only $13,272 in 2007, or $10,403 with a 20 percent renewal dividend.
  • An obstetrician paid $56,564 in 2003 but only $41,575 in 2007, or $32,585 at the renewal rate.
  • A neurosurgeon paid $103,558 in 2003 but only $76,117 in 2007, or the renewal rate of $59,659.

Malpractice lawsuits have fallen 50 percent, Nixon said, causing some malpractice lawyers to shift to other fields, such as commercial litigation.

It could not get any clearer.  Rein in medical malpractice abuses, and the results include more insurers, lower insurance costs, and more doctors.  That's a lesson that should be noted in other states, and in other arenas where reform is needed, says economist Raymond J. Keating.

Source: Raymond J. Keating,"Does Reform Matter? Look at Texas," Small Business & Entrepreneurship Councils, June 6, 2007; based upon: David Hendricks, "Insurance companies, doctors flock to Texas," San Antonio Express-News, June 1, 2007.


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