The Real World - California (Insurance)

I have one word for people who still believe that enacting so-called “tort reform” leads to lower insurance rates.  SUCKA!! 

Anyone who still swallows this argument must take a look at what’s been happening in California.

As we’ve noted here before, in 1975 California lawmakers placed a $250,000 cap on non-economic damages for malpractice victims.  This law is the gold standard for the medical and insurance lobbies, who run around the country and in the halls of Congress, saying the only way to reduce insurance rates for doctors is to strip patients of their legal rights, specifically enacting California's $250,000 cap.  Even the Congressional Budget Office has somewhat bought into this dubious argument.

But rather than causing California insurance rates to drop (you know, the way the “free market” is  supposed to work), California’s medical malpractice insurance industry has simply became bloated, with insurers paying out only tiny percentages of the premiums they are collecting from doctors. 

To the doctors’ rescue?  A decent Insurance Commissioner named Dave Jones, who has used authority granted him by California’s insurance regulation law, Prop, 103, to start challenging the industry – something that insurance commissioners rarely do, unfortunately.

Well this week, Jones’ quest to fight California's bloated med mal insurance industry and save doctors’ money reached a high pitch.  According to a news release issued by the California Department of Insurance,

Insurance Commissioner Dave Jones today announced lower rates for medical malpractice insurance offered by Medical Protection Company (MedPro) and NCMIC Insurance Company, saving doctors, dentists, chiropractors and other medical providers nearly $4 million annually in premiums. The two join three other insurers, NORCAL Mutual, The Dentists Insurance Company and The Medical Insurance Exchange of California's physicians and surgeons program, whose rates were also recently lowered as a result of action taken by Commissioner Jones, for a total savings to medical providers of nearly $23 million.

Last year Commissioner Jones required the top six medical malpractice (http://www.insurance.ca.gov/0400-news/0100-press-releases/2011/release030-11.cfm) insurance companies in California to submit rate filings to the Department of Insurance to justify their current rates. After review of those filings, Commissioner Jones called for rate reductions. As a result of the Commissioner's rejection of excessive rates, five of the companies' medical malpractice rates have been lowered substantially. This leaves one insurer still under review by the Department of Insurance.

Meanwhile, there is a proposed initiative on California’s ballot, called the “Insurance Rate Public Justification and Accountability Act,” to extend the commissioner's rate regulatory authority to the health insurance industry.  The consumer group Consumer Watchdog, which is behind the initiative campaign, should know what good such a law can do.  That’s because it was Consumer Watchdog that,

[I]ntervened in the MedPro challenge under a provision of Proposition 103 that encourages public participation in rate proceedings. Consumer Watchdog provided the detailed actuarial analysis that formed the basis for the determination to reduce MedPro's rates by 11.9%. Past rate interventions by Consumer Watchdog have saved $2.2 billion on auto, homeowners and medical malpractice insurance rates since 2003. See the savings chart:  …

Consumer Watchdog Campaign is chaired by insurance reform Proposition 103 author Harvey Rosenfield. Consumer Watchdog Campaign is the campaign affiliate of Consumer Watchdog, which was founded by Rosenfield and whose president, Jamie Court, an award-winning consumer advocate and author, is the proponent of the proposed ballot initiative.

Let’s hope this passes - and then spreads like wildfire around the country. 

Comments

[Justin McLeod]

Great post. I have never heard of the type of proactive intervention occurring in California anywhere else. We practice in Virginia, which has enacted similar tort reforms. I am now interested to look at the med mal premiums's growth or decline since reforms were instituted here in Virginia.