Thursday, December 20, 2007

And from the parallel universe of medical malpractice insurance . . .

Last month,

[New York Insurance] Superintendent Eric Dinallo said that to fill a $500 million deficit . . . the 30,000 physicians in the state who get malpractice insurance through two large nonprofit companies could owe $50,000 each.

Well, THAT’s one way to get your doctors’ attention!

This latest insurance crisis shows once again that it does not much matter whether an insurance company is for-profit or “nonprofit”. What matters most is that both types of companies get their premiums right. This requires correctly assessing the cost of the malpractice liabilities that they insure. After all, the cost of premiums is mostly driven by the cost of the liabilities. [Sound familiar? Anyone? Anyone?]

Even a not-for-profit insurance company that underprices its liabilities will sooner or later have to charge higher premiums, reduce benefits, or go out of business. Predictably, the doctors and the trial lawyers and the insurance companies and the state regulators disagree about what the real problem is. Of course that means they disagree how to solve this crisis they can't quite define. And, predictably, our governor has ordered another “study”. [Sound familiar? Anyone? Anyone?]

Is there a call to establish a state-run, single-payer med mal insurance mechanism so this crisis could be fixed without curtailing our right to sue and without requiring anyone to pay more? I haven't seen such a call but that's probably just due to inattention on my part.

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