Re:
Opposition to HR 5 – Legislation that Hurts Consumers and Fails to
Lower Insurance Costs for Doctors
Dear
Representative:
HR 5
would not only limit doctors’ liability when they injure a patient due to
medical error but it would also:
·
Limit the liability of hospitals, nursing homes, HMOs and even
drug companies when their defective product is part of a health care liability
claim; and
·
Limit punitive damages for reckless conduct, thereby reducing the
deterrence against harmful conduct by HMOs, nursing homes, hospitals and drug
companies. Telling health care providers that their liability exposure is
limited allows them to calculate the amount of liability exposure they can
afford to absorb and factor it in as the cost of doing business.
Experience
in states that have adopted limits on damages has shown that caps do little or
nothing to reduce medical malpractice insurance premiums paid by doctors while
hurting severely injured patients. For example: California adopted a $250,000 limit on “non-economic” damages in
its 1976 Medical Injury Compensation Reform Act (MICRA) but malpractice
insurance rates didn’t begin to drop until a broad insurance reform initiative
(Proposition 103) was passed by the voters in 1988. Under Proposition 103,
insurance companies, including malpractice insurers, had to: (1) rollback by 25%
unless insurers could demonstrate the rates were not excessive (which they
couldn’t) and (2) submit evidence to the state justifying rate increases after
the rollback was in place. As a result, rates began to drop immediately. West
Virginia, Nevada, and Missouri have also adopted caps but there have been no
corresponding reduction in doctor’s malpractice insurance rates in those
states.
The
insurance industry itself has continuously stated that placing caps, or limits,
on awards to patients who have been injured through medical errors has little or
no impact on the cost of medical malpractice insurance rates. Florida’s new
chief financial officer reportedly stated that rapidly rising malpractice
insurance premiums are largely because of insurers’ practice of undercharging
for coverage in previous years (February 26 online edition of The Tampa
Tribune). In January, the President of Florida’s largest malpractice insurance
company told a gathering of doctors that even if Florida adopts a cap, “it
would yield on average only 16 percent premium cut,” despite malpractice rates
that have doubled and tripled in the past two years. And, in a March 2002 news
release, the Executive Vice President of the American Insurance Association said
that “insurers never promised that tort reform would achieve specific premium
savings.”
A
federal cap of $250,000 on non-economic damages is not likely to reduce
malpractice premiums because it does not address the root causes of the
malpractice insurance crisis: insurer
business practices and the “boom and bust” insurance cycle. According to the National Association of Insurance
Commissioners, the three major causes of sharp underwriting cycles are large
“loss shocks,” changes in interest rates, and under-pricing.
Lower interest rates and under-pricing have been in place for quite some
time and September 11th provided the extremely painful shock loss.
In
addition, caps on non-economic damages have a disproportionate impact on those
with little or no earned income, such as children, full-time mothers and seniors
– exactly the problem facing Jesica Santillan’s family. Caps also have a
discriminatory impact on low-wage workers, including people of color and working
women, because their economic damages will be less than those who have higher
incomes, even if the injuries may be exactly the same. As a result, for these
workers, non-economic damages (for pain and suffering) may be the larger portion
of their compensation.
The
Institute of Medicine has reported that between 44,000 and 98,000 Americans die
in hospitals each year from preventable medical errors.
This estimate does not include the many thousands of medical mistakes
that result in injury or occur outside of hospitals.
Congress can help limit the high cost of medical malpractice insurance by
adopting legislation to improve patient safety, thereby reducing medical errors
and insurance reform modeled after Proposition 103.
For
all of these reasons we strongly urge you to oppose HR 5.
Sincerely,
USAction
United
Church of Christ
Justice and Witness Ministries
Rainbow/PUSH
Coalition
Consumer
Federation of America
Center
for Justice & Democracy