Passing the Buck on Malpractice Insurance

Call it the Frist effect (after the Republican Senate's new physician/majority leader). George W. Bush wants to operate. Simply put, he wants to cut the nation's trial lawyers (and their clients) off at the knees, through an invasive surgical procedure called medical liability reform.

The scene at the American Medical Association's National Advocacy Conference, held in Washington in early March, was enough to gladden the hearts of AMA members, insurance company executives, and GOP fundraisers alike. The president, featured speaker at the event, was welcomed by the gathered physicians as a genuine soulmate. Calling for federal action, Bush honed in immediately on the much-publicized national malpractice-insurance crisis. To the delight of his audience, he pandered directly to its foremost fears, angers, and prejudices.

Recent premium increases in the malpractice coverage doctors purchase could, the president intoned, be entirely blamed on the legal system; it was all the fault of personal-injury lawyers "fishing around for a lawsuit." There were too many "frivolous" actions brought against good doctors, he said, adding (to rousing applause) that "for the sake of the system," noneconomic damages (i.e. pain and suffering) should be capped at $250,000.

By Bush's inference, none of our contemporary malpractice litigation has arisen from substandard hospitals or incompetent doctors, whose existence was barely acknowledged by the AMA assemblage. That would come as news to the Mexican parents of Jesica Santillan, the tragic victim of fatal transplant errors at the Duke Medical Center in North Carolina. It would also surprise the litigants represented over the years by Sen. John Edwards, one of those ambulance-chasing malpractice solicitors, whose mostly working-class clients have testified to a panoply of horrific outcomes at the hands of the American medical establishment.

President Bush and his enthusiastic audience brushed aside such concerns. For the president, the calculation was simple: Most trial lawyers are Democrats, and most doctors are Republicans. Doctors, in fact, gave $17.5 million (two-thirds of their total campaign contributions) to the GOP in 2001-02, according to the Center for Responsive Politics. The AMA itself, which (says the Washington Post) has warned Democrats against opposing the Bush settlement cap, contributed $1.6 million to GOP congressional candidates in 2002. The White House wants to ensure that those funds continue to flow into Republican coffers.

There is more than just campaign money and a confluence of interests at play here, however. George W. Bush, his medical-policy point man Bill Frist, and the members of the AMA are similar kinds of people: country-club Republicans. They share certain perceptions and biases: making money is sacred, medicine should be a business, and legal or regulatory interference with those who know best (medically or otherwise) is bad for society.

The president did his part for class solidarity when he was governor of Texas. He made "tort reform" -- restrictions on the right to sue -- a centerpiece of his pro-corporate state policy, forcing enactment of caps on legal damages and higher standards of proof for plaintiffs in medical-malpractice and other injury cases. He also presided happily over a state that consistently ranks first in the number of for-profit hospitals and first or second in the percentage of its citizens lacking health insurance. Those dubious distinctions apparently cost him no lack of sleep.

America's medical élite, for their part, have shown little appetite for any implied humanitarian mission. News reports indicate that a fifth of all US physicians have stopped taking Medicare cases because of insufficient reimbursement and that another fifth have acquired business degrees, the better to pad their bottom lines. This is unbecoming behavior for a class of individuals who, according to wealth analyst Andrew Hacker of New York's Queen's College, have constituted America's highest-paid occupation for most of the past century, with six-figure incomes a standard feature of their profession. On the other hand, it renders the AMA membership's enthusiasm for taking its legal costs out of the hides of its victimized patients unsurprising.

Few, if any, of the doctors who walked off the job lately in several states to protest premium increases focused on the obvious source of their unhappiness: the insurance companies, including those run by their fellow physicians, which now issue over half of all malpractice policies. While liability premiums are certainly rising in about a dozen states, in-depth studies by USA Today and Americans for Insurance Reform (AIR) indicate conclusively that average jury awards, statistically flat since 1990, are not a significant contributing factor. Rather, the problem lies in the foolish financial strategies of the medical-malpractice insurance firms, which routinely invest collected premiums in what has become a casino stock market, in order to add to their profits.

Throughout the booming 1990s, insurers made 10% or more on their investments; last year, they lost money or earned less than 2%. Their answer: Raise rates (or, as major insurer The St. Paul Companies has done, drop malpractice coverage, lobby for tort reform, contribute to the GOP, and wait for a government cap on lawsuit damages before reentering the market).

The problem for the insured: those rising malpractice rates are not adequately regulated by the states, which are theoretically responsible for insurance oversight. AIR, a coalition of nearly 100 consumer groups, offers a sensible three-part solution: (1) more meaningful insurance disclosure laws; (2) stronger control over insurance rates by state commissions; and (3) repeal of the insurance industry's federal antitrust exemption under the 1945 McCarran-Ferguson Act (to prevent monopoly pricing).

In the meantime, a key finding by AIR researchers may serve to illuminate the unhealthy symbiotic relationship that has developed between conservative politicians, heedless or self-interested doctors, and greedy insurers. The current liability-insurance "crisis" is the third of the last 30 years (the others arose in the mid-1970s and mid-1980s). Each time, a stock-market downturn ate into malpractice-insurer profits, leading them to raise premiums, cut coverage, proclaim a crisis, and blame the nation's legal system. Their champion in the latest contrived emergency, George W. Bush, is less a knight-errant than the boy who cried wolf -- one too many times.

Wayne O'Leary is a writer in Orono, Maine.

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