Post on 18-Dec-2015
transcript
DRAFT 1
Medical Malpractice:Is the Crisis Over?
CAS Spring Meeting 2006Puerto Rico
Carl Ashenbrenner, F.C.A.S., M.A.A.A.
Principal and Consulting Actuary
Milliman, Inc.
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Medical Malpractice Liability
Overview of Session Carl Ashenbrenner, FCAS, MAAA
AMA Crisis States National Industry Results Texas Case Study
Kevin Bingham, ACAS, MAAA From Who’s Perspective The Future: Challenges and Opportunities
Robert J. Walling, FCAS, MAAA From Where’s Perspective A Call for Efficiency
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The AMA’s Crisis States
In June, 2002, the American Medical Association (AMA) released the results of a survey of its members, intended to evaluate the impact of the Professional Liability market on Access to Healthcare.
The Survey focused on whether the Professional Liability market was causing physicians to: Leave their current state of practice; Retire early; or Abandon high risk services
Based on survey results, AMA classified: 12 states as in a crisis 30 states as showing problem signs 8 states currently ok
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The AMA’s Crisis States
In March, 2003, the AMA updated its survey results: 18 states in crisis 26 states showing problem signs 6 states currently ok
In January, 2006, the AMA again updated it survey results: 21 states in crisis 22 states showing problem signs 6 states currently OK Texas – effective reforms halting crisis
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The AMA Crisis States
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Recent Events
February 27, 2006 – Americans for Insurance Reform (AIR) released study “New Report Confirms: Medical Malpractice Insurance Crisis is Over”
February 27, 2006 – The Council of Insurance Agents and Brokers issue statement challenging AIR report.
Senate Bill 22 (The Medical Care Access Protection Act of 2006) may be discussed during first week of May.
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Industry Results
National Health Expenditures
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
1960
1970
1980
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Hea
lth
care
Sp
end
ing
in $
Bill
ion
s
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Sh
are
of G
DP
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics.
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Industry Results
National Health Expenditures
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Ave
rage
Cos
t P
er C
apit
a
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics.
Note: 2005 Estimated
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Industry Results
Medical MalpracticeCountrywide Premium and Loss
0.00
0.50
1.00
1.50
2.00
2.50
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Ind
ex
Net Earned Premium Net Ultimate LLAE
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Industry Results
Medical MalpracticeCountrywide Loss and LAE Ratio
0.500.600.700.800.901.001.101.201.301.401.50
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
LL
AE
Rat
io
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Industry Results
Comparing calendar year changes in loss and/or premium provides incomplete picture
Country-wide industry information does not show problems by state or region
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Industry Results
Medical Malpractice Premium Compared to Retail Gas Prices and Health Care Per Capita Costs
0.00
0.50
1.00
1.50
2.00
2.50
3.00Ja
n-95
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Jul-
05
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Ind
ex
Retail Gas Prices Medical Malpractice Premium HealthCare Cost Per Capita
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State Example - Texas
Medical MalpracticeTexas Premium and Loss
0.00
0.50
1.00
1.50
2.00
2.50
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Ind
ex
Manual Premium Average Paid Indemnity (NPDB)
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Texas History of Reform
Tort reform laws passed effective 9/1/95.
Texas Department of Insurance established across-the-board reduction in rates (of all liability lines) and estimated savings of $2.9 billion between 1996-2000.
Order rate reductions for medical malpractice (doctors and other health care providers) between 11.5% and 21% during 1996-2000.
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State Example - Texas
Texas Medical MalpracticeCalendar Year Loss & DCC Ratio
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Calendar Year
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Texas History of Reform
Proposition 12 passes (narrowly) in September 2003.
Texas legislature passes House Bill 4 which places a $250,000 cap on non-economic damages for all physicians named in an occurrence effective September 1, 2003.
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Texas History of Reform
“A Year After Prop 12, Just One Texas Malpractice Writer Seeks to Cut Rates” – Best Wire 9/22/04
Company A reduces rates 13% - 2/17/06
Company B reduces rates nearly 33% - 3/23/06
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Texas History of Reform
In 1999, seventeen companies were writing new policies in Texas; number slid to 4 in 2002. (AMA)
Fifteen new companies started selling malpractice insurance in Texas (Montemayor 2/22/05).
More doctors providing high-risk services since reforms passed. (Texas Medical Association - 8/23/04).