What Are Medical Malpractice Caps Really Costing Us?

In a recent post, I explored the constitutionality of medical malpractice damage caps after Florida’s 2nd District Court of Appeal in Charlotte County ruled against limits on non-economic damages in October. Across the state in Broward County, a similar ruling is now under review by the Florida Supreme Court—highlighting the fact that such limits on awards that include pain and suffering have been controversial in Florida since first being introduced in 2003.

While Florida and more than a dozen other states question the constitutionality of such caps, one must wonder why seventy percent of all U.S. states passed laws to limit the monetary award that can be received by a medical malpractice plaintiff in the first place? According to advocates, the intent is to curb skyrocketing malpractice insurance costs that threaten the medical community’s ability to effectively help patients.

Yet, according to recent data, malpractice insurance premium rates continue to rise—and, more importantly, the numbers often show that there is little difference in the rate of increase when comparing states that do and don’t have damage caps. In an annual survey of malpractice insurance costs published last month by Medical Liability Monitor (MLM), one such example is Colorado—a unique state in that they have two medical malpractice caps, a $1 million umbrella cap on all compensation and a $300,000 limit on non-economic damages. Even with such draconian laws in place, an obstetrician-gynecologist in the Centennial State might have paid an average premium of $38,578 in the year 2000 and then $46,155 in 2016; an increase of about 20 percent or 1.2 percent per year on average. Compare that rate of increase to Iowa, a state that has no caps on medical malpractice payouts. Data shows that the average annual premium for an Ob-Gyn in 2000 was $27,839 and $31,292 in 2016—just 12.4 percent higher overall or an average increase of 0.8 percent per year.

Additionally, proponents have also voiced fears that the non-existence of damage caps may prevent doctors from setting up practice in or even leaving a specific state altogether. But the evidence simply does not support this claim. While many states enacted cap laws in the early- to mid-2000s, historical American Medical Association (AMA) data from 1965 to 2010 shows that the number of physicians per 100,000 population in the U.S. has always risen by about 8-12 percent every five years. This trend continued from 2000 to 2010, and the figures even show that the number of physicians (per 100,000 population) is actually higher in states without caps on damages—347 as compared to 290 per 100,000 in states with damage caps. In other words, caps on damages do nothing to attract doctors to a state.

While no one is denying that malpractice insurance is an expense for doctors, the numbers show that it might not be as burdensome as some healthcare professionals and medical lobbyists would have you believe. And let’s not forget why a doctor carries malpractice insurance; it is so that when/if a physician makes a mistake that hurts someone, the victim can be properly compensated. Doctors are certainly human and do make mistakes, but those mistakes can cause enormous harm to hard working families. Carrying malpractice insurance is simply the responsible thing to do, just like when Americans buy car insurance.

While the courts continue to argue the constitutionality of such laws, one must question whether these caps do more to penalize injured patients than to protect doctors. It would seem that, as a nation, our intent should be to provide better healthcare for society at large, rather than limiting an individual’s ability to seek fair compensation when they have been wronged.