Press Release:
For immediate release
Tuesday, May 8, 2006
12:01 a.m. EDT

 

Contact:
Christopher Fleming
301-347-3944
cfleming@projecthope.org

Study Says That AMA Data Belie Claims Of Medical Malpractice
Premium Crisis 

Other Practice Expenses Dwarf Premium Costs

Bethesda, MD – Despite claims by the American Medical Association and others that rising malpractice premiums are driving physicians out of business, self-employed physicians paid lower premiums in 2000 than they did in 1986, according to data from surveys conducted by the AMA itself from 1970 to 2000.

In constant 2000 dollars, mean malpractice premiums rose from $5,934 in 1970 to $20,106 in 1986, then declined to $15,478 1996, reports a study in the May/June 2006 Health Affairs that analyzes the AMA data. Premiums rose from 1996 until the AMA discontinued the surveys after 2000, but in 2000 mean premiums were $18,400, still below the 1986 level. Moreover, while premiums were falling from 1986 to 2000, all other practice expenses were rising rapidly.

“The reported recent demise of medical practice as a result of rising malpractice premiums has been greatly exaggerated,” Suffolk University law professor Marc Rodwin and coauthors write. The AMA surveys “indicate that premiums have consistently been a small percentage of total practice expenses.” Premiums rose from 6 percent of total expenses in 1970 to 11 percent in 1986, then dropped back down to 6 percent in 1996 before rising slightly to 7 percent in 2000.

Rodwin and coauthors say that these trends held when the data were analyzed regionally and separately for “high-risk” specialties, such as obstetrics, although there are slight variations. They suggest that perceptions of a crisis may stem partly from the 1996-2000 period, when physician income fell as malpractice premiums rose. But the researchers point out that falling revenues, likely caused by managed care, were the primary culprit for the decrease in physician income during this period. Between 1996 and 2000, revenues fell $2,859 a year, between three and four times the amount of yearly premium increases ($731).

Following the AMA’s halt to its surveys in 2000, the much-cited Medical Liability Monitor Report (MLMR) indicated that malpractice premiums increased by10-20 percent per year from 2000 to 2002, and by more than 20 percent in 2003. Rodwin and coauthors assert that the MLMR is a less accurate source of premium data than the AMA surveys, since the MLMR tracks advertised premiums that often are discounted or adjusted to make sales. However, they say, even if premiums rose by as much as the MLMR reports, “premiums in 2003 would still have been a small percentage of total practice costs and thus have had a negligible effect on mean practice income.”

Moreover, add Rodwin and his coauthors, Suffolk law students Hak Chang and Jeffrey Clausen, in 2003 average physician income stood between the 95th and 99th percentiles for all Americans.

The article can be found at http://www.healthaffairs.org/Rodwin.pdf  until the full May/June issue is released at 12:01 AM on Tuesday, May 9. After that, the article may be accessed at http://content.healthaffairs.org/cgi/content/abstract/25/3/750.

ABOUT HEALTH AFFAIRS:

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.

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©2006 Project HOPE–The People-to-People Health Foundation, Inc.