"Trial Lawers Wrong" - Tort Reform Works

The Greenwood Commonwealth had this to say in a recent editorial:

A half-dozen years ago, doctors were up in arms, leaving the state, retiring early or scaling back their practices because of the onslaught they were facing from trial lawyers. The only thing standing between them and insolvency was malpractice insurance, and its cost had soared -- that’s if they could find an insurer.

Thanks to a couple of rounds of tort reform, the situation appears to be largely resolved.

Last week, the state’s largest provider of malpractice insurance announced it was cutting its rates by another 20 percent. It was the fourth consecutive annual rate reduction by Medical Assurance Company of Mississippi. Cumulatively, the premiums that health providers are paying for malpractice insurance are almost 60 percent less than they were shelling out during the peak of the crisis.

It should be remembered that when lawmakers were battling over putting sensible limits on civil damage awards and curbing venue shopping, the opponents -- mostly friends of the trial bar -- scoffed at the notion that the changes would impact insurance rates. They claimed that the rise in malpractice insurance premiums was a result of poor investment returns, not the legal climate.

The stock market has tanked in the past year, and yet malpractice premiums are falling significantly anyway. It goes to further show that the reformers were right, and the trial lawyers wrong.

The editorial follows a press release from Governor Haley Barbour who had announced that Mississippi's largest provider of medical malpractice insurance had lowered it rates, once again, following the trend since the passage of comprehensive tort reform.

Ridgeland-based Medical Assurance Company of Mississippi (MACM) reduced its medical liability insurance rates across the board by 20 percent for 2009. This is the fourth consecutive annual rate reduction and returns the premiums that Mississippi physicians pay for malpractice insurance to rates comparable to those paid in 2002.

In addition to a reduction in rates, tort reform has opened the door for better accessibility to healthcare through an increase in the number of physicians insured by MACM.

“MACM saw a five percent increase in the number of physicians insured by the company between the end of 2002 and the end of 2008,” Governor Barbour said. “These additional physicians are now living and practicing in Mississippi and helping provide the health care that is so essential to a better quality of life for all Mississippians."

Insurance Commissioner Mike Chaney praised the rate reduction.

“Mississippi physicians are now paying 42.2 percent less in premium for their professional liability insurance than they did in 2004, after tort reform was enacted through special sessions of the Mississippi Legislature,” Commissioner Chaney said.

“Additional, and much stronger, tort reform was passed during a special session in the spring of 2004. As a result of this combined legislation, Mississippi healthcare has benefited. As an example, if a physician paid $10,000 in premium in 2004, that same physician would pay just $5,780 today as a result of fours years of rate reductions by MACM. In addition, this physician would have received refunds of premium totaling almost $7,000 during this same time period.”

When tort reform was first considered, MACM promised that if the legislation were passed, the company would respond by passing monetary savings to its customers. Through rate reductions and premium refunds for the past four years, MACM has honored this commitment.

I got this nifty chart from a comment over at Mississippi Perspective.

2002 –Musgrove Tort Legislation Passed
2003 – 54% premium increase in premiums
2004 – 19.4% premium increase in premiums
2004 – (Sept) Barbour Tort Legislation Passed
2005 – No change in premium (In December, 15% of premium paid was refunded)
2006 – 5% premium decrease
2007 – 10% premium decrease
2008 – 15.5% premium decrease
2009 – 20.0% premium decrease