Pennsylvania Governor Edward Rendell said that his state has turned the corner on improving its medical malpractice insurance market thanks in part to recent legislative and court reforms and he urged legislators to continue a premium abatement program for another two years to give the reforms time to take full effect.
He cited reduced payouts from the state’s catastrophic malpractice fund Mcare, flattening insurance rates, a leveling off of the number of physicians using Mcare and private insurers’ renewed interest in writing malpractice coverage as among the signs that the market has gotten better.
He said that for most physicians, in 2006 the cost of their primary layer of insurance will be flat and the Mcare surcharge will be about 25 percent lower than last year.
“That is great news for physicians and, in turn, for their patients,” Rendell said.
The state’s Mcare program provides insurance for claims above $500,00 for physicians who can’t obtain this layer of insurance in the private market at an affordable price.
Claims payouts from the Mcare fund are expected to total $232 million in 2005, a substantial drop from $320 million paid in 2004. In 2003, the total had climbed to $379 million.
To cover the costs of Mcare, participating physicians pay a surcharge to Mcare that is a percentage of their primary layer premium. For 2006, the Mcare surcharge will be reduced from 39 percent to 29 percent.
Rendell said the number of physicians relying upon MCare, which had been rising, has held fairly steady at 34,000 over the past few years.
In other good news, private insurers are not seeking the rate increases they sought earlier in the decade. The state’s three largest medical malpractice insurers, PMSLIC, Med Pro and the Joint Underwriting Association have kept their rates flat. In 2002, PMSLIC increased its rates an average of 40 percent and another 54 percent in 2003.
In terms of availability of insurance, more doctors have formed their own risk retention groups, relieving some of the pressure. One of these groups, the Northeast Physicians Risk Retention Group, now covers physicians in 17 northeast Pennsylvania counties.
In addition, the state’s largest medical malpractice writer, PMSLIC, has also announced that, for the first time in three years, it will begin to write new business.
The claims picture appears better as well. According to statistics from the Pennsylvania Supreme Court, the number of medical malpractice cases filed in 2004 dropped 34 percent statewide over 2000-2002.
Rendell also credited more use of mediation and administrative reforms implemented by the courts for lowering costs.
Rendell used the occasion to press for continuation of the premium abatement plan, which was created to help physicians pay their premiums until the reforms take hold and to encourage them to continue practicing in Pennsylvania. Under the abatement, high-risk specialists, including orthopedic surgeons, neurosurgeons, ob/gyns and other high-risk surgeons, had 100 percent of their Mcare payment abated in 2003, 2004 and 2005. All other physicians received a 50 percent abatement. The program has cost the state $220 million a year.
“When you look at all these statistics collectively, I think everyone
would agree that we’ve started to turn the corner on the medical malpractice problem,” Rendell said. “I expect the legislature will agree with me that, based on the need to maintain our momentum and not revert back to a crisis, that the abatement will be continued.”
He predicted that “another two years of the abatement will ensure that the reforms that have been passed have a chance to become fully effective.”
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