David Hendricks: Insurance companies, doctors flock to Texas
When Texas voters in 2003 approved a state proposition capping lawsuit awards for medical malpractice cases, only four insurance companies even offered malpractice policies to Texas doctors.
Now, 30 insurance companies crowd the market, and premiums have fallen like so many San Antonio Spurs playoff opponents. The lower cost of being a doctor in Texas has helped trigger a stampede of applications for physician licenses, with the waiting line now up to 12 months.
Rates have fallen an average of 21.3 percent, and up to 41 percent at one insurance company, says former state Rep. Joe Nixon, a Houston trial lawyer who helped sponsor passage of Proposition 12.
An internal medicine doctor in Houston paid $18,507 for malpractice insurance in 2003 but only $13,272 in 2007, or $10,403 with a 20 percent renewal dividend, according to figures given to Nixon by the state’s largest insurer, Texas Medical Liability Trust.
An obstetrician paid $56,564 in 2003 but only $41,575 in 2007, or $32,585 at the renewal rate. A neurosurgeon paid $103,558 in 2003 but only $76,117 in 2007, or the renewal rate of $59,659.
Before Proposition 12, the state did not impose a cap on the amount of noneconomic damages in a malpractice lawsuit against doctors. Proposition 12 established a cap of $250,000. Malpractice lawsuits have fallen 50 percent, Nixon said, causing some malpractice lawyers to shift to other fields, such as commercial litigation.
Insurance companies are flocking to Texas because now they can put a numeric value on the risk of doing business in Texas, something that was not possible when the sky was the limit for juries. Assessing risks helps assure profits for insurance companies. As more insurance companies entered Texas, rates have dropped even further because of competition.
Probably no other profession could benefit so much from legislated lawsuit protection. As Nixon explained it, doctors have little control over their incomes. Their fees are determined by government programs such as Medicare and Medicaid and by insurance companies.
On the expense side of doctors’ balance sheets, however, are rising incomes for staff, higher rents for offices and, before 2003, outlandish malpractice insurance premiums.
An unknown number of Texas doctors closed their practices or retired earlier than they would have liked.
Tennessee is considering a lawsuit cap similar to the one in Texas. In the meantime, 350 Tennessee doctors have applied to move their practices to Texas, 50 of those with license applications still pending, Nixon said.
Meanwhile, about 2,250 license applications await processing at the Texas Medical Board in Austin. The wait could be as long as a year for some of the more experienced doctors because it takes longer to review their records.
The fear is that some doctors will give up on Texas and go elsewhere instead of waiting. A $1.22 million emergency funding request was approved during the last days of Texas legislative session for the Texas Medical Board, which licenses physicians. That is on top of the $18.3 million regular biennial appropriation, said Jane McFarland, the board’s chief of staff.
The board plans to add nine new employees to its 139-member staff, seven of which will help chop away at the backlog of license applications.
Six months to a year is a long time to make a doctor wait to start a practice in a new location. Texas needs as many doctors as possible because it ranks in the bottom half of states in doctors per capita. Even the new wave of applicants won’t change that.
Alluding to popular restaurants with lines of patrons out the front door, Nixon said: “Some of these doctors will find a new place to eat.”
Editor’s Note: This was originally posted on MySanAntonio.com. It has been moved or deleted and we are now unable to locate the original. We will archive this on CG’s website. If you are looking for a medical malpractice insurance quote in Texas, click here.