Vested Interest - News and Notes - April 2007 Issue

April 2007 Issue > News > Torts

New Study on Looming Physician Shortage

New Study: A March 2007 JAMA article entitled "Looming Shortage of Physicians Raises Concerns About Access to Care," claims that the reason for the recent doctor shortage is due to a policy instituted in the mid-nineties by the medical community which called for freezes on medical school slots, caps on residency slots, and cuts in residency funding. Medical organizations that track physician work trends now note that their prior predictions failed to take into account the rapid growth of the general U.S. population and the growth of the aging population, both factors which are now seen as largely responsible for driving the current demand for doctors.

Illinois Unemployment Rate Drops Sharply in March

Illinois' unemployment rate dropped to 4.2% in March and recorded its largest month-over-month percentage point drop in 30 years, according to the Illinois Department of Employment Security. The unemployment rate fell 0.6 percentage point from February, due largely to 37,000 fewer unemployed workers. The largest job gains came in the educational and health services sector, while manufacturing suffered the greatest amount of job losses. (Crain's Chicago Business - April 19, 2007)

New Data Confirms that Doctors were Price-Gouged by the Insurance Industry During this Decade

NEW YORK -Americans for Insurance Reform (AIR) the release of Stable Losses/Unstable Rates 2007, a new study that examines fresh insurance industry data to determine what caused the most recent medical malpractice insurance crisis for doctors. The study by AIR finds that the insurance crisis that hit doctors between 2001 and 2004 was not caused by claims, payouts or legal system excesses as the insurance industry claimed. Rather, according to the industry's own data:

* Inflation-adjusted payouts per doctor not only failed to increase between 2001 and 2004, a time when doctors' premiums skyrocketed, but they have been stable or falling throughout this entire decade.

* Medical malpractice insurance premiums rose much faster in the early years of this decade than was justified by insurance payouts.

* At no time were recent increases in premiums connected to actual payouts. Rather, they reflected the well-known cyclical phenomenon called a "hard" market. Property/casualty insurance industry "hard" markets have occurred three times in the past 30 years.

* During this same period, medical malpractice insurers vastly (and unnecessarily) increased reserves (used for future claims) despite no increase in payouts or any trend suggesting large future payouts. The reserve increases in the years 2001 to 2004 could have accounted for 60 percent of the price increases witnessed by doctors during the period.

Study author J. Robert Hunter, Director of Insurance for the Consumer Federation of America, former Federal Insurance Administrator and Texas Insurance Commissioner, said: "This report is proof positive that the huge medical malpractice insurance rate increases between 2000 and 2003 were not related to a jump in claims. Rather, as in the mid-1970s and mid-1980s, they were simply the result of insurance industry economics, supplemented by insurer hype intended to divert attention away from the mismanagement by insurers that caused the crisis."

Co-author Joanne Doroshow, Executive Director of the Center for Justice & Democracy, said, "This report shows that the real reasons medical malpractice insurance rates rose so dramatically for doctors during this decade was market forces and dropping interest rates, not because of a sudden increase in medical malpractice jury awards or payouts. These periodic insurance crises will continue to occur unless lawmakers take steps to reform the insurance industry. State lawmakers must strengthen state insurance regulatory laws and Congress must repeal the decades-old McCarran Ferguson Act, which exempts the insurance industry from anti-trust laws."

The full study can be found at: http://insurance-reform.org. (Americans for Insurance Reform News Release - March 28, 2007)