ANNAPOLIS – Maryland’s Senate president weighed into the medical malpractice insurance debate with a bill to reduce the disparity in doctors’ premium costs that will be heard in the General Assembly next week.
Currently, the lowest-risk doctors, including psychiatrists and allergists, pay an annual base rate of $8,928 for malpractice insurance.
Obstetrician gynecologists, the highest-risk doctors, pay $115,919 per year.
Senate President Thomas V. Mike Miller’s proposal reduces that spread to 600 percent, meaning that no doctor can pay more than six times the lowest premium. As a result, lower-risk categories would see an increase in premiums and higher-risk categories would get relief.
“Put into practice, this strategy will immediately reduce obstetricians’ premiums by 40 to 50 percent, saving them as much as $40,000 annually,” said Miller in a written statement. “This will alleviate the problem, which otherwise is causing many physicians to either close their practice or retire, without impacting patients’ rights.”
MedChi, the state physicians’ association, disagreed with having low-risk doctors subsidize higher-risk, higher-paid doctors.
“It does not at all address the real problem, which is the amount insurance companies are having to pay (in malpractice payouts),” said T. Michael Preston, executive director of MedChi. He called the bill “rearranging the deck chairs on an already sinking ship.”
The bill from Miller, a Calvert Democrat, is just one of several attempts this session to solve malpractice issues.
Another bill, proposed by Sen. James Brochin, D-Baltimore County, would create deductibles for malpractice insurance, similar to automobile and health insurance.
“It offers doctors an opportunity to have lower medical malpractice premiums in exchange for them to take on some risk,” said Brochin, a medical insurance broker.
Brochin has proposed deductibles of $10,000, $25,000, and $50,000, meaning that if successfully sued, a doctor who chose this plan would agree to pay those amounts in out-of-pocket damages.
Another set of bills introduced by Sen. Delores G. Kelley, D-Baltimore County, and Delegate John A. Hurson, D-Montgomery, would consider a company’s total investment income when setting rates.
There is a national standard for insurance pricing that requires part of investment income to be plowed back into subsidizing premiums, said Steven Larsen, chairman of the Alliance to Preserve Access. Putting all investment income into premium rates would impair the financial stability of Medical Mutual, the state’s largest malpractice insurer, he said.
Medical Mutual is setting rates beyond what it needs, said Kelley, adding that the industry has a typical practice of setting higher-than-needed rates and giving a rebate to those who renew with the company.
“What’s really causing it is the situation going on with the way insurance is being priced and the lack of accountability there,” said Kelley.
Medical Mutual disagreed, saying rates can’t be set higher than necessary, because they are reviewed by the Maryland Insurance Administration. Rebates are given when claims are lower than anticipated, and because of the company’s mutual nature, profit goes back to doctors, said a company spokesman.
The company has a 90 percent renewal rate, and the returned dividends go to most of those who chipped in, he said.
Gov. Robert L. Erhlich is taking a different approach to the malpractice crisis, focusing on tort reform instead of insurance reform. The administration bill aims to reduce payouts and limit pain and suffering compensation to $500,000. – 30 – CNS-2-19-04