Question

Insurers take several factors into account when setting malpractice premiums. Many healthcare professionals are claiming that the premiums are so high that it is forcing them to reconsider staying in healthcare. Discuss what factors have led to an increase in the premiums. Why are we seeing an increase in the number of malpractice suits? How does this impact the supply of healthcare professionals available to see patients? What are some solutions that have been proposed to deal with the increase tort claims and rising premiums? Do you feel that our current malpractice system really deters negligence?

Answer 1

The increase in malpractice premiums is a result, mainly, of the rising number of malpractice claims. The insurers are making losses due to a high number of serviced claims which is prompting them to jack up the insurance premiums. Thus, majorly, declining profitability is leading to higher premiums.

Malpractice suits are increasing because of:

1. Standards of healthcare delivery have fallen
2. Highly developed law practice
3. Focus on patient safety and well-being

I do not think this will lead to a dampening of supply of healthcare professional in the short-term, which may happen in the long-term. However, what it will lead to is that an increasing number of doctors will focus on defensive medication.

The solution suggested/implemented to tackle this issue is capping damages - the highest amount a plaintiff can claim in a suit. This has already been implemented in some states and has shown results. In the future, the governments/judiciary might want to focus on campaigns that deter plaintiffs from filing frivolous suits.

The current malpractice system, for sure, deters negligence. However, just like the two faces of the coin, there exists a potential challenge of deterring the good intentions of highly motivated doctors. They are forced to take a back seat and prescribe safer interventions.