State reviews malpractice insurance

Of The Patriot-News

The state insurance commissioner will soon announce whether doctors must carry an additional $250,000 in medical malpractice insurance.

Doctors now must buy $500,000 in private coverage. They get an additional $500,000 in coverage from Mcare, a state program funded with a surcharge on doctors.

Joel Ario, the newly nominated insurance commissioner, will decide whether the state will raise the amount of private coverage required to $750,000.

The amount of coverage from Mcare would drop to $250,000, so up to $1 million in insurance coverage would still be available to pay a malpractice claim.

Similar coverage amounts and requirements apply to hospitals and nursing homes, and these also would be raised.

Ario will base his decision on whether Pennsylvania has enough medical malpractice insurers to provide the additional coverage. About 70 active medical malpractice insurers, including self-insured groups, operate in the state, said Peter Adams, the deputy for Mcare.

That’s about the same number of insurers as in 2005, when the state also considered — but decided against — raising the amount of private coverage required. But more insurers — about 280 — are licensed to write coverage than in 2005, Adams said.

Many doctors and state officials have long supported phasing out Mcare, and a 2002 law outlines the plan for doing so. Some doctors believe Mcare forces them to subsidize bad doctors who are repeatedly sued, said Chuck Moran of the Pennsylvania Medical Society.

Medical malpractice cases can take many years to resolve. It’s estimated that $2.3 billion in Mcare costs eventually will have to be paid. Each year, doctors pay a surcharge based on awards from a prior year.

The medical society says this “unfunded liability” will eventually deter young doctors from coming to Pennsylvania, because they will have to pay toward incidents that happened before they arrived.

In recent years, doctors have been shielded from the full cost of Mcare. Gov. Ed Rendell created an abatement program that pays the full Mcare costs for doctors in high-risk specialties such as neurosurgery and obstetrics and pays half the Mcare costs for other doctors.

Rendell created the program at the height of a medical malpractice crisis when doctors were threatening to leave the state or retire because of the high cost of medical malpractice insurance.

Doctors are expected to receive about $138 million worth of abatements this year, Adams said. The abatement money comes from a tax of 25 cents per pack of cigarettes, traffic violation surcharges and a tax on private malpractice insurance premiums, which together generate about $230 million annually.

The eventual goal is to end Mcare and require doctors and hospitals to obtain all their coverage in the private insurance market.

The medical society has said the price of medical malpractice insurance has stabilized. But it will take a few more years to see the full benefit of reforms in 2002 intended to improve patient safety and reduce lawsuits.

They fear premium increases that will follow the shift to more private coverage, combined with remaining Mcare costs, will create another crisis for doctors.

The medical society and the Hospital & Healthsystem Association of Pennsylvania want the state to use the $230 million in taxes collected for the abatement program to pay off the projected Mcare liability and subsidize private malpractice premiums.
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