NCPA - National Center for Policy Analysis

Medical Malpractice: The Diagnosis

March 7, 2003

Almost no physician or medical insurer will dispute that medical malpractice awards are out of hand and causing serious damage to the medical field. One possible solution is to put a nationwide cap on awards for noneconomic damages -- principally pain and suffering -- to medical malpractice victims. But do caps on medical malpractice awards really keep doctors' insurance premiums down?

  • The White House, pro-tort reform business groups and insurance companies all note that states with caps on awards had average premium hikes of just 12 percent last year, while states without caps averaged a 44 percent premium jump.
  • But the Administration's analysis is incomplete, says Lorraine Woellert, writing in Business Week; it omits data from nearly a dozen states without caps, such as Vermont and Arizona, where premiums have stayed low.
  • Factoring in the 12 states without caps, premiums rose only an average of 12.7 percent in capped states last year, while premiums rose 20.4 percent in states without them.

And if you go back a few years, there has been a growing divergence in rate increases between states with caps and those without them:

  • In 2001, premiums went up 5.8 percent in the cap states, compared with 9.6 percent in jurisdictions without them.
  • However, the year before, premiums actually rose more in states with caps (3.2 percent) than in states without them (2.7 percent) -- a pattern that also held true in 1999 (2.12 percent vs. 0.54 percent).

Source: Lorraine Woellert, "A Second Opinion on the Malpractice Plague," Business Week, March 3, 2003.


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