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The Truth About Medical Malpractice Premiums & Payouts

If you’ve followed legislation related to the civil justice system, then you are likely familiar with the claims made about the consequences of personal injury lawsuits-which include some cases involving Illinois traumatic brain injuries. Medical malpractice lawsuits draw most of the fire. Many claims are made about the consequences of these lawsuits and the need to take away victim’s rights as a result.

Our Chicago medical malpractice attorneys are consistent critics of tort reform efforts, because we understand the vital role that the justice system plays in helping those who suffers serious injury (and even death) as a result of the misconduct of others. We also know that the claims made about the need for these reforms are usually overblown and often completely wrong.

For example, when it comes to limiting medical malpractice lawsuits, some “reformers” point to the rising cost of medical malpractice insurance premiums for doctors and hospitals. The argument goes that these rising premiums are necessary because of skyrocketing payouts in medical malpractice cases.

But these claims bear no connection to reality.

The Truth
In reality, these insurance premiums are not increasing-they are decreasing rapidly. In addition, the payouts are not rising-they are quickly falling. It is important for all legislators at the local, state, and national levels to understand the actual facts about these issues before making law that affects the rights of all those hurt by others, including Chicago traumatic brain injury victims.

Recently released data from the National Association of Insurance Commissioners is a helpful resource when it comes to understanding these issues.

What do they show?

For one thing, the information shows that the losses incurred by medical malpractice insurers, presumably referring to payouts, have decreased by well more than half over the last nine years. In 2003 the total payouts were about $8.5 billion nationwide. Last year that total had fallen to about $3.6 billion-a nearly 57% decline. This decline does not even account for inflation. In other words, there is absolutely not a trend in favor of skyrocketing malpractice payouts-the opposite is true.

This trend has been echoed in malpractice premiums that doctors are forced to pay. Over the last few years the total premiums collected have decreased by about $2 billion annually. The decline in premium rates has been less substantial than the decline in payouts. This might reflect a maneuver by insurance companies to pass off some, but not all, of their savings onto their clients. It suggests that the oppressive tort reforms laws are severely affecting those hurt by medical negligence with insurance companies reaping most of the benefit of the legal handcuffs placed on the injured.

Each Chicago medical malpractice attorney at our firm knows that the data from the NAIC is reinforced by insurance figures from the National Practitioner Data Bank. This resource provides information on payouts and premiums from individual doctors only. The NAIC information includes hospitals. Taken together this information is further evidence that the claims made by many tort reform supports are plain wrong.

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