Alliance Encouraged by GAO Report on Medical Liability Crisis

July 31, 2003

The Alliance of American Insurers believes the U.S. General Accounting Office’s (GAO) latest report (03-702) on the medical liability insurance crisis provides further evidence that medical liability premiums have skyrocketed in certain jurisdictions due to the dramatically increased size and frequency of claims.

“We are encouraged by the findings of the GAO report, and we hope it adds momentum to reform efforts already underway in Congress,” said Kenneth Schloman, Alliance Washington counsel.

The GAO report also debunks the widely disseminated myth that insurance companies have caused the medical liability crisis. The report clearly states that insurer “profits are not increasing, indicating that insurers are not charging and profiting from excessively high premium rates.” In addition, the report notes physician-owned insurers write the majority of malpractice coverage.

“Reforming the medical malpractice system is critical, because the rising costs of health care are borne by numerous insurance lines,” Schloman said. “As a result of the crisis, the cost of medical malpractice insurance goes into the overhead that physicians and hospitals have to charge their patients. Ultimately, this affects any insurance policy that provides medical coverage, such as automobile, homeowners, workers compensation and general liability.

“For example, roughly 50 percent of all dollars spent on workers injured on the job goes for medical care, and the cost of this care continues to grow at rates far in excess of the rate of inflation more than 11 percent between 2001 and 2002.”

The Alliance of American Insurers reportedly supports the use of caps for non-economic damages, and the abolition of joint and several liability in all types of litigation as a means to reduce escalating jury awards and settlements, and urges the Senate to pass S. 11, the “Patients First Act of 2003,” a critically-important medical liability insurance reform measure. The House has already passed a similar bill, H.R. 5, the “Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2003.”

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