Liability premium shock is spreading, an AMNews exclusive survey shows

In 2001, a few physicians started whispering the term "liability crisis," but by the end of 2004 those whispers had turned into a chorus of shouts.

At least one company raised liability premiums 40% or more in 19 states in 2004, according to an AMNews analysis of data from state insurance departments, medical societies and insurance companies.

In 2001, 12 states had increases of that magnitude, according to the data.

Physicians in even more states feel the crunch today. The analysis showed that at least one company in 34 states raised rates 25% or more in 2004. That's nearly double the 18 states with that experience in 2001.

"In Illinois, OBs were paying $80,000 a year for insurance; now they are paying $147,000. In Florida, they were paying $166,000, and now they are paying $270,000. That shows that the landscape has changed," said American Medical Association President-elect J. Edward Hill, MD.

Higher premiums can have a big impact on physicians, who are often forced to cover the extra business cost without additional reimbursement. HMO contracts don't let physicians pass along the costs. And for years doctors have said that Medicaid and Medicare reimbursement rates are set at levels that don't cover overhead.

So, nearly four years since liability problems were first seen in Pennsylvania and West Virginia, more physicians in more states say they are factoring liability premiums into their practice decisions. The financial implications factor into deciding whether to continue practicing medicine in a particular state, whether to continue high-risk procedures and whether to become politically active.

The landscape shifts

Physicians began to sense they were in for a rough few years in 2001. But they didn't expect things to reach the level they have in some areas.

The situation escalated in December 2001 when the St. Paul Companies announced that it was pulling out of the medical liability insurance market. And the situation in most states has been deteriorating since.

James P. Marvel Jr., MD, president of the Medical Society of Delaware, said Delaware is surrounded by states that have made the AMA's list of 20 states in a medical liability crisis. "That worries us," he said.

In 2001 and 2002, physicians moved to Oklahoma to escape high rates in Texas, Pennsylvania and Florida, said Jack J. Beller, MD, immediate past president of the Oklahoma State Medical Assn. "Now we are seeing our physicians retiring early and stopping some high-risk procedures," he said.

Arizona doctors are also concerned. "The landscape here is changing, and it's changing dramatically," said Chic Older, executive vice president of the Arizona Medical Assn. "I don't think we are at a crisis point yet, but we are on track."

Delaware, Oklahoma and Arizona are among the states in which at least one insurer increased rates by 40% or more in 2004; none made the 2001 list.

In North Carolina -- another state to make the 40% list in 2004 but not 2001 -- women in some western parts of the state have to drive 50 miles to see an obstetrician, said Robert W. Seligson, executive vice president of the North Carolina Medical Society. But physicians also worry that charity care for the uninsured is suffering.

"Because of the economic realities of running a practice today, doctors will sometimes have to limit free care so they can cover their premiums," Seligson said.

Doctors have asked -- and continue to ask -- their state and federal lawmakers for help in changing the medical liability landscape.

Taking action

Most physicians say they never thought marching on their state capitols and lobbying Congress for tort reforms would be part of their job description. But it increasingly has been since 2001.

To stabilize premiums, legislatures in every state having problems and some states looking to stave them off have considered or will consider liability reforms. Bills range from capping the amount of money juries award for pain and suffering to shortening the amount of time plaintiffs have to file a claim.

"The war is on," said Brian O. Foy, executive director of the Oklahoma State Medical Assn. "We've won some battles, but there are still more to win."

Oklahoma's Legislature passed noneconomic damages caps that apply to some high risk specialties, and that has helped. But not all physicians are covered, and doctors say there is more to do.

National tort reform that includes a $250,000 cap on noneconomic damages awarded in medical liability cases has been the AMA's top advocacy priority since June 2002 and remains the Association's top priority in 2005. Finding enough votes to block a Democratic-led filibuster in the Senate has been the stumbling block for the measure. But doctors are closer to achieving that goal after Republicans picked up four Senate seats in the November 2004 election.

"We are more optimistic than ever before," Dr. Hill said.

Some bright spots

Some states already have seen results from measures they enacted after rates began to rise in 2001.

In September 2003, Texas voters passed a constitutional amendment to make a $250,000 noneconomic damages cap legal. That has improved the state's liability climate, said Edinburg internist Linda Villarreal, MD.

Although things are not perfect, it's easier to recruit physicians, fewer lawsuits are being filed, and more insurance companies are willing to write policies, she said. "The atmosphere is just so much more pleasant."

Things also are brighter in Mississippi today than several years ago. Lawmakers in 2002 passed a $500,000 cap on noneconomic damages. Although Cleveland, Miss., obstetrician-gynecologists Mark Blackwood, MD, and Bradley Baugh, MD, closed their practice for a short period in 2002, they reopened. Dr. Blackwood wants to see reforms at the federal level, and he's optimistic that rates will come down in the future.

"We're still practicing medicine," he said.