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I would argue that the litigious nature of our society with malpractice claims drives up cost more than anything else.
While I don't dispute that medical malpractice issues/costs are a part of our overall healthcare woes, I don't know that I'd go so far as to say med-mal is the main culprit.
Here's a very interesting report that supports this:
MEDICAL LIABILITY, MALPRACTICE INSURANCE AND HEALTH CARE
SUMMARY/KEY FINDINGS
In discussions about how to solve our vast national health care crisis, questions are often raised about why the system is so expensive and how costs can be reduced to make health care affordable for everyone. Some of the discussions have focused on medical malpractice insurance and liability issues, raising questions about the cost of insurance for doctors and whether there is a need to further limit patients’ ability to bring claims against incompetent doctors or unsafe hospitals.
To answer these questions, Americans for Insurance Reform, (AIR), a coalition of nearly 100 consumer and public interest groups around the country, has produced the most comprehensive review of medical malpractice premiums, claims, profits and the impact of medical malpractice
tort law limits to date. Based on its analysis, AIR finds:
• Medical malpractice premiums, inflation-adjusted, are nearly the lowest they have been in over 30 years.
• Medical malpractice claims, inflation-adjusted, are dropping significantly, down 45 percent since 2000.
• Medical malpractice premiums are less than one-half of one percent of the country’s overall health care costs; medical malpractice claims are a mere one-fifth of one percent of health care costs. In over 30 years, premiums and claims have never been greater than 1% of our nation’s health care costs.
• Medical malpractice insurer profits are higher than the rest of the property casualty industry, which has been remarkably profitable over the last five years.
• The periodic premium spikes that doctors experience, as they did from 2002 until 2005, are not related to claims but to the economic cycle of insurers and to drops in investment income.
• Many states that have resisted enacting severe restrictions on injured patients’ legal rights experienced rate changes (i.e., premium increases or decreases for doctors) similar to those states that enacted severe restrictions on patients’ rights, i.e., there is no correlation between “tort reform” and insurance rates for doctors.
Of course, this is not to say that med-mal insurers aren't making nice profits in this rotten economy (from the same report)...
Before examining premium and cost data in detail, it is worth analyzing medical malpractice insurers’ current bottom line, and determine how well they did in recent years as they raised rates on doctors and pushed states and Congress to enact laws to limit the liability of their clients - health care providers.
To say medical malpractice insurers did well during this period would be an understatement. Despite their lobbying position that medical malpractice claims and lawsuits were making it difficult for them to survive, these companies thrived. In fact, they did so well last year that while every other sector in the economy began suffering through a global economic crisis, medical malpractice insurers had “a very good” 2008. This came “after posting record profits in 2007.” And the good news for the medical malpractice insurance industry is not over yet. A.M. Best predicts that their “operating profits will continue through 2009.”
Profit/Return on net worth
• According to the National Association of Insurance Commissioners (NAIC), in 2007 the medical malpractice insurance industry had an overall return on net worth of 15.6%, well over the 12.5% overall profit for the entire property/casualty industry.
• Over the last five years, the return on net worth for medical malpractice insurers was 11.1%, again outpacing the entire property/casualty insurance industry at 10.3%.
Essentially, our entire medical care system needs an overhaul.