Malpractice Premiums and Caps

There has been a 61% decrease in medical malpractice insurance payouts in Pennsylvania over the last 7 years, according to Pennsylvania Governor Ed Rendell.

According to the governor, this has lead to an 18% decrease in malpractice premiums. I’m trying to figure out why a 61% drop in payouts leads to an 18% decrease in premiums. Where is all of the money going? In any event, we still have a doctor shortage in much of Pennsylvania.

Why aren’t doctors fleeing to Pennsylvania? If they are not going to Pennsylvania, where do they go? The top 5 highest paying jobs in the United States are doctors? Are they quitting medicine and becoming real estate agents? Have you ever met a doctor that just stopped practicing medicine and took up something else?
Look, doctors can retire early and work less hours. I’m oversimplifying a bit. But the “doctors are fleeing because of malpractice premiums” proponents seem to me to be the man with a hammer. Everything is a nail.

Ted Frank at Point of Law, an interesting blog I read regularly, suggested in a recent post that doctors are fleeing Illinois because the Illinois high court struck down caps on noneconomic damages in Illinois malpractice cases.

The link Mr. Frank provides underscores this point:

One way to retain new doctors is to help them find jobs in Illinois. The state has a healthy physician job market, but many new graduates don’t know where to look.

Oops. That is saying that they don’t know how to find jobs. This is a little different than fleeing to avoid uncapped noneconomic damages. “A healthy physician job market.” It sounds like the better answer to this crisis is Monster.com.

There is zero evidence in the article summarizing the study (the link to the study itself is broken) that malpractice premiums caused by the removal of caps on noneconomic damages has caused a single doctor to leave Illinois. I can’t even find anything to indicate the premiums have risen.

Moreover, who exactly are these doctors who are packing their bags to leave because of a theoretical possibility that malpractice premiums may increase? How much do they earn now? I have to tell you, I’m not so sure I want a doctor that came to Maryland because he is fleeing another jurisdiction because he does not like the litigation environment. This is probably not a doctor who is swimming with prior client referrals.

There is no question that medical malpractice premiums in Illinois are higher than in other states. I bet you will also find that doctors in Illinois make more money than doctors in surrounding states. Some states are going to have higher insurance premiums than other states. Illinois is a relatively densely populated state. What city in the country do you think has the most family physicians, for example? Chicago, Illinois. If doctors start fleeing Chicago to go somewhere else, this might not be all together a bad thing for the country.