When a crisis meets reality

August 23, 2005

REMEMBER MARYLAND's medical malpractice insurance crisis of a mere nine months ago? Gov. Robert L. Ehrlich Jr. decided that no less than a special emergency session was needed to address what he considered the state's most pressing problem (aside from a perceived slot machine shortage). Lawmakers met and approved a plan. The governor vetoed it and the General Assembly forced it into law. All this occurred over the objections of trial lawyers who claimed the "crisis" was overblown and that insurance rate increases weren't justified, but who can believe a bunch of lawyers?

Well, maybe they had a point after all. Medical Mutual Liability Insurance Society of Maryland, by far the state's largest malpractice insurer, has decided that malpractice insurance rates don't need to be boosted next year. Company officials now admit that their costs - for legal defense and settlements - are actually shrinking. So much for the runaway jury hysteria. After spending $93 million on malpractice cases in 2003, Med Mutual's costs dropped to $78.5 million last year and are on pace to be even lower this year.

So where does that leave Maryland? The malpractice reform legislation enacted in January has probably had a limited effect. Hospitals and nursing homes are certain to be helped by the law's new cap on wrongful death payouts. And doctors are getting a break on this year's malpractice insurance rate increase thanks to the tax on HMO premiums. Both measures were overdue, and doubtless there are some obstetricians and other specialists who are staying in business because of these reforms. Everyone benefits from that.

But it would be a mistake to assume that everything is hunky dory in the malpractice arena because of a short-term stabilization in costs - whether that's due to market forces or reform. Malpractice payouts have, in fact, grown substantially in recent years. It's a complex problem that demands a reasoned response and not a bunch of political posturing. Even now, there's a concern that private health insurers may lower physician reimbursements to take advantage of the drop in doctors' costs and increase their own profits. Maryland Insurance Commissioner Alfred W. Redmer Jr. needs to guard against that possibility. For some doctors, declining reimbursements are a bigger financial burden than rising insurance rates.

For now, the news is good. Malpractice rates aren't going up. Just don't expect the situation to last.

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