This month's collapse of Reciprocal of America, the state's largest reciprocal insurer against medical malpractice claims, means much more than the loss of insurance coverage for more than 300 hospitals and other health-care providers in Tennessee.
It means that the medical malpractice crisis in Tennessee has arrived ahead of schedule. And the entire health-care system may be in jeopardy as a result.
Ironically, the receivership of Reciprocal of America and its affiliates left 3,500 attorneys without insurance for legal malpractice as well. Will this ripple effect serve as a wake-up call to trial lawyers who steadfastly oppose medical malpractice reform, or do we continue to play the litigation lottery and jeopardize everyone's access to affordable health care?
The spiraling cost of health insurance for individuals and employers, malpractice liability insurance for doctors and hospitals, and coverage for TennCare enrollees is the result of declining investments and increasing costs associated with an aging, poorly educated, and sickly population of Tennesseans as well as the cost of medical malpractice litigation. We are not alone. The American Medical Association finds a full-blown crisis in at least a dozen states, including Florida, Georgia, Mississippi, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Washington, and West Virginia. It says crises are looming in another 30 states.
With increasing frequency, doctors can no longer afford to provide care to those who need it, and those who need care cannot afford it or the health insurance that is supposed to make the care affordable. Health-care costs for the privately insured increased 10 percent in 2001. Last year, premiums for employer-sponsored health coverage rose 12.7 percent. The percentage of Americans covered by employment-based health insurance fell 1 percent to 62.6 percent in 2001, and two out of five Americans have no group insurance coverage.
Individuals are losing their private health-insurance coverage at an alarming rate. The uninsured increased by 1.4 million people in 2001. Eight out of 10 uninsured are in working families that cannot afford health insurance and are not eligible for public programs like TennCare. In Tennessee, the newly uninsured and now uninsurable turn to TennCare, which teeters on the brink of collapse.
Comprehensive insurance reform is the only real answer. Reform must address each component: insurers as well as the insured, providers as well as payers, and courts as well as claimants and their counsel. The latter is commonly referred to as "medical malpractice reform." Although such reform is debated in Congress, Tennessee cannot afford to wait for a federal solution.
According to the Tennessee Medical Association (TMA), 73 percent of Americans support medical malpractice reform, which imposes caps on damages for noneconomic "pain and suffering" and punitive damages. The median jury-verdict award increased 43 percent between 1999 and 2000. More than half of all jury awards now exceed $1 million, and the average has increased to $3.5 million. According to the TMA, escalating jury awards and the high cost of defending even frivolous lawsuits are driving premium increases. The increase is making access to affordable care progressively more difficult. Improving access to affordable health care is crucial at this time.
California capped damages over 25 years ago. As a result, premium increases are only one third of the rest of the nation. Under California's more stable system, for example, an ob-gyn's insurance costs approximately $57,000 per year compared to $210,000 for the same coverage in Florida. We need such stability in Tennessee.
This is why I am sponsoring legislation in the 103rd General Assembly patterned after California's reforms, including caps on damages which otherwise are speculative and intangible. We must protect the rights of individuals to fair compensation for malpractice injuries but provide a more reasonable degree of predictability. Caps accomplish that. They provide accountability but help preserve access and affordability. Without caps, the litigation lottery is more like Russian roulette for the rest of us. n
Mark Norris is a Republican state senator from Collierville.