Wisconsin physicians bracing for jump in insurance costs

The state's patient compensation fund could be hit hard by unlimited noneconomic damage awards.

By Kevin B. O’Reilly — Posted Aug. 15, 2005

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Wisconsin physicians could see their average medical liability insurance premiums increase by as much as 18% next July now that the state Supreme Court has struck down caps on noneconomic damage awards, according to an actuarial estimate.

Rob Walling, a principal at Bloomington, Ill.-based Pinnacle Actuarial Resources, examined industrywide closed-claims data from two comparable states where no caps are in place to arrive at the estimate. Pinnacle has analyzed the potential effects of medical liability reforms on behalf of more than a dozen states.

While premiums for the primary layer of medical liability coverage of $1 million per occurrence and $3 million per year could rise between 8% and 15%, Pinnacle estimates that premiums assessed to fund the Wisconsin Injured Patients and Families Compensation Fund could increase by as much as 150%.

"Less than 10% of total losses are actually getting into the PCF layer now," Walling said. "That increases significantly when you remove the cap on noneconomic damages."

Doctors will have some breathing room, since the PCF's rates went into effect before the Supreme Court ruled that caps violated the state Constitution's guarantee of equal protection. The PCF's new rates won't go into effect until July 1, 2006.

"I'm actually relieved to hear it's not more than that," said Paul Wertsch, MD, past president of the Wisconsin Medical Society. "I didn't expect it to double overnight, though."

Prior to the verdict, Wisconsin was rated "currently OK" on the AMA's medical liability crisis map. In crisis states, physicians are curtailing risky procedures, retiring early or moving to other states in search of lower liability insurance premiums.

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