Baird Webel
Specialist in Financial Economics
Vivian S. Chu
Legislative Attorney
Bernadette Fernandez
Specialist in Health Care Financing
As a policy area, concerns about medical malpractice typically involve issues related to the market for physician liability insurance, the prevalence of malpractice in the health care system, and the resolution of malpractice complaints through the tort system. This report focuses primarily on the private insurance market. Medical malpractice liability insurance has attracted congressional attention numerous times over the past decades, particularly in the midst of three “crisis” periods in the mid-1970s, the mid-1980s, and the early 2000s. These periods were marked by sharp increases in physicians’ liability insurance premiums, difficulties in finding any insurance in some areas as insurers withdrew from providing coverage, reports of physicians leaving areas or retiring following insurance difficulties, and a variety of public policy measures at both the state and federal levels to address the perceived crises. Which public policy measures have been effective in addressing the difficulties in the medical malpractice liability market has been a matter of debate, in part because these difficulties have been at the intersection of the health care, tort, and insurance systems.
The overall medical liability insurance market is not currently exhibiting the same level of disruption as in the past. Over the past few years, losses incurred by medical malpractice insurers have dropped dramatically and premiums paid have fallen, albeit more modestly. Nonetheless, problems with the affordability and availability of malpractice insurance persist, especially in particular regions and physician specialties (e.g., obstetricians). Even during a period of relative calm, the malpractice system experiences issues with equity and access. For example, some observers have criticized the current system’s performance with respect to compensating patients who have been harmed by malpractice, deterring substandard medical care, and promoting patient safety. Yet there are differing opinions as to the extent that each of these particular areas has been affected by the current malpractice system.
The latest legislative interest in medical malpractice reform differs from the past in that it is largely driven by overall health reform and issues of health care costs, rather than widespread disruptions in the medical malpractice insurance market. In terms of direct costs, medical malpractice insurance adds relatively little to the cost of health care overall. According to the National Association of Insurance Commissioners (NAIC), medical malpractice premiums written in 2009 totaled approximately $10.8 billion, while overall health expenditures are estimated by the Congressional Budget Office (CBO) to total $2.6 trillion. Indirect costs, particularly increased utilization of tests and procedures by physicians to protect against future lawsuits (“defensive medicine”), have been estimated to be much higher than direct premiums. CBO estimated that enacting federal tort reforms would reduce both health care spending by approximately 0.5% ($11 billion in 2009), and the federal budget deficit by $54 billion over a 10- year period.
The recently enacted Patient Protection and Affordable Care Act (P.L. 111-148) included language that allows states to receive grants to enact and implement alternatives to tort litigation. In the 112th Congress, H.R. 2, which would repeal P.L. 111-148, passed the House on January 19, 2011. The specific issue of medical liability reform was addressed by the House Committee on the Judiciary in a January 20, 2011 hearing. The committee marked up H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011, on February 8 and February 16, 2011, and ordered the bill reported to the full House by a voice vote. Among other things, the HEALTH Act would implement a cap on non-economic damages for health care lawsuits.
Date of Report: February 22, 2011
Number of Pages: 11
Order Number: R40862
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
Specialist in Financial Economics
Vivian S. Chu
Legislative Attorney
Bernadette Fernandez
Specialist in Health Care Financing
As a policy area, concerns about medical malpractice typically involve issues related to the market for physician liability insurance, the prevalence of malpractice in the health care system, and the resolution of malpractice complaints through the tort system. This report focuses primarily on the private insurance market. Medical malpractice liability insurance has attracted congressional attention numerous times over the past decades, particularly in the midst of three “crisis” periods in the mid-1970s, the mid-1980s, and the early 2000s. These periods were marked by sharp increases in physicians’ liability insurance premiums, difficulties in finding any insurance in some areas as insurers withdrew from providing coverage, reports of physicians leaving areas or retiring following insurance difficulties, and a variety of public policy measures at both the state and federal levels to address the perceived crises. Which public policy measures have been effective in addressing the difficulties in the medical malpractice liability market has been a matter of debate, in part because these difficulties have been at the intersection of the health care, tort, and insurance systems.
The overall medical liability insurance market is not currently exhibiting the same level of disruption as in the past. Over the past few years, losses incurred by medical malpractice insurers have dropped dramatically and premiums paid have fallen, albeit more modestly. Nonetheless, problems with the affordability and availability of malpractice insurance persist, especially in particular regions and physician specialties (e.g., obstetricians). Even during a period of relative calm, the malpractice system experiences issues with equity and access. For example, some observers have criticized the current system’s performance with respect to compensating patients who have been harmed by malpractice, deterring substandard medical care, and promoting patient safety. Yet there are differing opinions as to the extent that each of these particular areas has been affected by the current malpractice system.
The latest legislative interest in medical malpractice reform differs from the past in that it is largely driven by overall health reform and issues of health care costs, rather than widespread disruptions in the medical malpractice insurance market. In terms of direct costs, medical malpractice insurance adds relatively little to the cost of health care overall. According to the National Association of Insurance Commissioners (NAIC), medical malpractice premiums written in 2009 totaled approximately $10.8 billion, while overall health expenditures are estimated by the Congressional Budget Office (CBO) to total $2.6 trillion. Indirect costs, particularly increased utilization of tests and procedures by physicians to protect against future lawsuits (“defensive medicine”), have been estimated to be much higher than direct premiums. CBO estimated that enacting federal tort reforms would reduce both health care spending by approximately 0.5% ($11 billion in 2009), and the federal budget deficit by $54 billion over a 10- year period.
The recently enacted Patient Protection and Affordable Care Act (P.L. 111-148) included language that allows states to receive grants to enact and implement alternatives to tort litigation. In the 112th Congress, H.R. 2, which would repeal P.L. 111-148, passed the House on January 19, 2011. The specific issue of medical liability reform was addressed by the House Committee on the Judiciary in a January 20, 2011 hearing. The committee marked up H.R. 5, the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011, on February 8 and February 16, 2011, and ordered the bill reported to the full House by a voice vote. Among other things, the HEALTH Act would implement a cap on non-economic damages for health care lawsuits.
Date of Report: February 22, 2011
Number of Pages: 11
Order Number: R40862
Price: $29.95
Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports
Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.
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