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The Cushy Life of the Medical Malpractice Insurance Industry

By Joe Consumer

If you're following the health insurance debate - especially medical malpractice issues - this post's for you!

When Illinois lawmakers passed their clearly unconstitutional ?cap? on compensation for medical malpractice victims a few years ago, they did something only a true cynic could appreciate.  At the same time, they enacted one of the best med mal insurance regulatory laws in the country, including strong oversight over rates and new transparency requirements.  Sounds great, until you find out that they added a ?non-severability? clause to the law, so that if the cap were struck down (virtually certain as the Illinois Supreme Court had previously struck down two similar ?caps?), all of these great medical malpractice insurance regulatory laws would be thrown out as well, leaving Illinois medical malpractice insurers virtually free to once again charge doctors excessive rates.

In the few years this regulatory law has been in place, its positive impact has been tremendous.  The Illinois Division of Insurance believes that these new insurance reforms - and not the cap ? greatly improved the medical malpractice insurance environment with expanded coverage and lower premiums for doctors.  Since this portion of the law was also struck down (even though there?s nothing unconstitutional about it), the Illinois Division of Insurance is practically begging lawmakers to repass it.  They say:

The 2005 Reform Laws imposed changes to the Illinois Insurance Code that improved insurer reporting and transparency requirements and enhanced the Department?s rate oversight authority. Since 2005, the Department has observed improvements in the medical malpractice insurance market. In particular, the Department observed:

• A decrease in medical malpractice premiums. Gross premium paid to medical malpractice insurers has declined from $606,355,892 in 2005 to $541,278,548 in 2008;
• An increase in competition among companies offering medical malpractice insurance. In 2008, 19 companies offering coverage to physicians/surgeons each collected more than $500,000 in premiums, an increase from 14 such companies in 2005; and
• The entry into Illinois of new companies offering medical malpractice insurance. In 2008, five companies collected more than $22,000,000 in combined physicians/surgeons premiums ? and at least $1,000,000 each in premiums ? that did not offer medical malpractice insurance in 2005.

We hope they do something - immediately ? because Congress sure doesn?t seem poised to crack down on them anytime soon.  Seems like the medical malpractice insurance industry may have gotten itself removed from the federal bill to repeal the insurance industry?s outrageous anti-trust exemption.  As the New York Times, reports, ?Under the bill, health insurers would no longer be protected from liability for price-fixing, bid-rigging or dividing up market territories, according to the sponsors.  But after industry lobbying, the new version would not affect medical malpractice insurers.? 

Full post as published by ThePopTort on February 24, 2010 (boomark / email).