The American Association for Justice, the trial lawyers’ lobby group, has an astounding statistic: medical malpractice insurance companies’ average profits are higher than those of 99 percent of Fortune 500 companies.
As the nation remains mired in a debate over health care reform and how to keep down the costs of expanding coverage, AAJ is trying to point out that Republicans claims that medical malpractice lawsuits are one of the big cost drivers is completely misleading. In fact, though malpractice claims and so-called “defensive medicine” does account for a small percentage of unnecessary costs, medical errors and the astronomical profits of malpractice insurers appear to be a bigger part of the problem.
AAJ’s report released today finds that the average profit of medical malpractice insurance companies is higher than 99 percent of all Fortune 500 companies and 35 times higher than the Fortune 500 average for the same time period; and malpractice insurers have seen their profit margins range from 5.9 percent to 74.8 percent, with an average of 31.2 percent. The report also finds that malpractice insurers have publicly overestimated their losses and underestimated their profits in an attempt to suggest the insurance business and medical practice in general faces a crisis that must be resolved by so-called “tort reform” — i.e., making it harder for patients to sue and to collect damages for their injuries.
Insurance companies are gouging doctors on their premiums to mislead lawmakers,” said American Association for Justice President Anthony Tarricone, managing partner at Kreindler & Kreindler LLP, in a statement released with the report. “And today, injured patients are often left with no avenue to pursue justice, while health care costs continue to skyrocket.
The problem with past legislation entitled tort reform is that the legislative measures constituted a disconnect between the "cure" and the problem. The problem is that medical providers are being gouged by medical malpractice insurers.
Previously auto insurers would base their premiums on matters including a consumer's credit rating, but a credit rating has nothing to do with a person's driving or risk in getting into an accident. Reforms were necessary to curb this abuse.
Only 2% of premiums are associated with litigation experience.
It's time that we focus on medical malpractice "insurance" reform. In the face of heinous profits, doctors and medical providers are being gouged by insurance carriers. It's time we focus on the real problem - not hurting consumers who are the victim of medical malpractice, but rather the insurance carriers who are unfairly basing premiums on matters other than true risk in the market and making them report their profits to the bodies that regulate same including the departments of insurance. It is time for reform, but the reform should be regarding medical malpractice insurance and not the victims to which the insurance are designed to make whole in the event of catastrophic loss due to errors and omissions.
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