NCPA - National Center for Policy Analysis


October 1, 2004

Damage caps on medical malpractice awards, which took effect in Texas a year ago, are reducing the frequency of lawsuits, providing an incentive for specialized physicians to practice in the state and slowly reducing the cost of malpractice premiums, according to the Dallas Morning News.

  • Lawsuit filings have declined in several Texas counties: In Dallas, lawsuits dropped from about 127 per month between January and August 2003, to 19 per months after September 2003, when the damage caps took effect.
  • Physicians practicing in high-risk specialties such as neurosurgery and obstetrics have increased: In May 2004, 419 neurosurgeons are licensed in the state, up from 407 in May 2003, while licensed obstetricians, gynecologists and OB/GYNs number at 3,201, up from 3,054 last year.
  • Insurance premiums have gone down for many hospitals, particularly those that self-insure for the initial $5 million, $10 million or $25 million of potential losses: The state's hospital association said that on average, its members reported an 8 percent decrease in premiums in 2004 and a 17 percent drop for renewals into 2005.

Some doctors are still waiting for their insurance premiums to drop. Over 50 percent of Texas physicians have reported no decrease in their insurance premiums, but observers say the insurance industry is somewhat reluctant to decrease premiums until they are assured the decline in lawsuits is permanent.

Conversely, the Texas Medical Liability Trust, the state?s largest medical liability insurer, has reduced its rates by 16.4 percent. Meanwhile, the state's joint underwriting association was denied a 35.6 percent rate increase by the Texas Insurance Commissioner.

Source: Terry Maxon, "No Cure-All: Time Hasn't Healed Controversy Over Caps on Damages," and "Doctors Still Awaiting Lower Rates," Dallas Morning News, September 26, 2004.


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