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Report: State Tort Reforms Don't Lower Premiums For Doctors or Patients

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While opponents of health care reform continue to believe that tort reform is some sort of panacea to what ails our current system, a new report from the American Association for Justice shows that state tort reforms have provided a boon to insurance companies, leading to record profits while physician and patient premiums continue to skyrocket.

An analysis of data from the National Association of Insurance Commissioners (NAIC) and company annual statements shows malpractice insurer profits are 24 percent higher in states with caps. In these cap states, insurers took in 3.5 times more in premiums than they paid out in 2008. In contrast, insurers in states without caps took in just over twice what they paid in claims.

The findings also show absolutely no correlation between the cost of malpractice premiums and health insurance premiums. For example, Maine has the ninth lowest malpractice premiums but the fourth highest health insurance premiums. Conversely, Nevada has the third lowest health insurance premiums nationally, but malpractice premiums are the country’s ninth highest, despite having a cap in place for eight years.

Now that over 30 states have malpractice caps, insurance companies are enjoying extremely high levels of profit. In 2008, the average profit of the 10 largest medical malpractice insurers was higher than 99 percent of Fortune 500 companies and 35 times higher than the Fortune 500 average.

The data make clear that tort reform is just another insurance company handout. When insurers cried wolf and demanded tort reform, they just pocketed the profits, never passing savings onto physicians or patients. While 98,000 people die every year from preventable medical errors, it’s nonsensical to limit patients’ rights simply to fill insurance company coffers.

To view a copy of Insurance Company Handout: How the Industry Used Tort Reform to Increase Profits While Americans’ Premiums Soared, visit http://www.justice.org/clips/Insurance_Company_Handout.pdf.

AAJ has released a series of reports throughout the health care debate, as well as video tributes to the lives behind medical negligence. To learn more, visit www.98000reasons.org.

2 Comments

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  1. Michael says:
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    Really? Is it true that the American Association of Justice (A.K.A. the Association of Trial Lawyers of America) are against tort reform? Ray, be a responsible jounalist and get some unbiased information. Do not base your facts on a liberal organization such as the AAJ.

  2. michael says:
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    Yes, the insurance companies are making a profit. However, you’re not telling the whole story. Profit is the difference between total revenue and expenditures. If revenue is constant (malpractice premiums) and expenditures (law suit pay-outs) are less, you therefore have GREATER PROFITS. So, do caps work? Yes. Do the insurance companies make more profits? Yes. The real question is when will the malpractice premiums decrease since the number of pay-outs(read:decrease risk) has decreased? The burden is on the insurance company to decrease the premium AS A RESULT of the lower pay-outs.