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Past releases |
Steep Malpractice Rate Hike will
Disrupt Care
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Immediate release August 6, 2003 Baltimore, MD - A proposed steep increase in malpractice insurance rates affecting most Maryland physicians quickly will cause some medical practices to limit their ability to provide care, according to MedChi, The Maryland State Medical Society. Testifying today before the Maryland Insurance Commissioner on a proposed 28 percent rate increase by Medical Mutual, the state's largest malpractice carrier, MedChi presented results of an independent actuarial analysis of the proposed rate showing that soaring growth in the size of malpractice claims makes the rate increase "painful but necessary." "Make no mistake: with this rate increase, the malpractice insurance crisis which has been ravaging medical communities just across Maryland's borders will take hold firmly here," said MedChi Executive Director Michael Preston. He cited a recent survey of Maryland obstetricians, in which one-third of respondents said they would stop delivering babies if their malpractice insurance rates jumped more that 25 percent. "That day has arrived," Preston said, "and it means that pregnant women-especially in rural areas-will soon have trouble finding a doctor to deliver their babies." It is also likely that disruptions will arise in other medical specialties as well, he added. MedChi hired an independent actuary to review the proposed rate increase after it was announced by Medical Mutual in June. The actuary, Dean Anderson, testified that the growing severity, or size, of malpractice judgments and settlements was the main driving force behind the need for higher rates. He said that the low rate of return on investments is only a minor factor in the rise. Anderson said that his analysis yielded a so-called "indicated rate" of 38.6 percent. This compared to a rate indication produced by Medical Mutual's internal actuaries of 38 percent. An actuary's indicated rate is the rate of increase (or decrease) in the level of premium that an insurer must charge to generate enough revenue for the insurer to pay the claims which are expected to arise. Medical Mutual management chose to request a rate increase of 28 percent, according to company CEO David Murray, because the company is sufficiently healthy financially to subsidize the rates this year in hopes that the adverse claims payment trends turn around next year. Murray acknowledged, however, that without such a turn-around, another rate increase next year probably will be necessary. The difference between the actuaries' "indicated rate" and the 28 percent rate applied-for by Medical Mutual, Preston said, means that "the situation in even worse that it looks." He said that Medical Mutual is a prudently run company which has served Maryland doctors well, but "even a well-run malpractice insurer can't stay ahead of an out-of-control liability system." MedChi, The Maryland State Medical Society, is a non-profit membership association of Maryland physicians. Its membership of over 7,000 represents nearly two-thirds of all practicing physicians in the state. Its mission is to serve as Maryland's foremost advocate and resource for physicians, their patients and the public health. ###
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