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Massachusetts med mal: Prof. Marc Rodwin responds

Marc A. Rodwin, Professor of Health Law and Policy at Suffolk University Law School, sends the following:

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Ted Frank's post does not accurately report what my coauthors and I state in our article (Rodwin, et al. 2008. Malpractice Premiums In Massachusetts, a High-Risk State: 1975-2005 Health Affairs 27, No. 3: 835-844).

1) The Massachusetts study was a follow-up to our analysis of the AMA's data on malpractice premiums and physicians income from 1970 to 2000 (Rodwin, Marc A. et al. 2006. "Malpractice Premiums and Physicians' Income: Perceptions of a Crisis Conflict with Empirical Evidence." Health Affairs 25, No. 3: 75-758.) The AMA's data showed that mean premiums adjusted for inflation had changed little between 1970 and 2000, the year it stopped collecting such data. It revealed that there were cycles of rises and falls but that the peak over 30 years was around 1986 and that premiums fell then until 1996 and thereafter rose, but were still lower in 2000 than in 1986. Premiums were also a small fraction of total practice expenses. This pattern was true nationally, for the regions the AMA reported, and for Ob/Gyn, the highest risk specialty. While premiums declined from 1986 to 1996, all other practice expenses increased dramatically.

2) After two years in print no problem with our analysis has been shown, either by the AMA or any other group. However, one could raise two methodological objections. First, the data ended in 2000 and so was not current. Second, regional and national averages might not reflect a state-level premium crisis. Some people believe that the lack of caps on awards and other legal measures cause a premium crisis and the AMA data could not address that issue.

3) The Massachusetts study addressed these limitations of the AMA data. First, the data was current (All data through 2005 and rates declined since then). Second, Massachusetts is, by all measures, a crisis state. It is called such by the AMA and state medical society. It has no hard cap on awards, and it is reputed to have high premiums in the insurance industry. Further, the National Practitioner Data Bank's data indicates that it is the fourth highest state nationally in terms of mean payouts to settle malpractice lawsuits. Thus, it is a test case. By everything we know about malpractice insurance, Massachusetts should have among the top premiums in the country.

4) Contrary to what Ted Frank's posting states, the Massachusetts data found that mean premium rates for all physicians increased only slightly from 1975 to 2005.

5) Ted Frank makes the usual misleading point by discussing premium increases in terms of percentage increases, rather than dollar increases. Physicians pay dollars, not percentages. Small dollar increases appear large when expressed as percentage increase because most premiums are relative smaller dollar amounts. In 1990, premium rates for 72 percent of physicians were less than $20,000 while in 2005, premium rates for 78 percent of physicians were less than $20,000 a year for the most typically purchased type of policy. Since the insurer significantly discounted what it charged physicians from the official rates in 2005, but did not in 1990, the actual amounts that physicians paid were still lower. In addition, Ted Frank fails to acknowledge any premium decreases over 30 years.

6) Ted Frank accuses the authors of cherry picking. However, our study provides more reliable and comprehensive data than has ever been published before. It reveals rates by specialty of practice, dollar level of coverage and policy type. It reveals the distribution of discounts and surcharges to insurance rates, and the distribution of physicians purchasing different types of policies. It reveals trends over time, showing premium cycles. Ted Frank, in his own cherry picking points out premium rises, ignores their declines, and does not indicate long term trends.

7) The study compares the premiums cost for the same policy type and coverage level. We reveal that physicians have purchased policies with different coverage levels, but these changes are not as Ted Frank states. There have been some increase in dollar amount of insurance purchase and some increased in purchase of less expensive policy types. The changes are analyzed and detailed in the text and exhibits.

8) Contrary to what Ted Frank states, we don't mix inflation adjusted data and non-inflation adjusted data. All our data is expressed in 2005 dollars.

9) Unlike Ted Frank, who makes unsubstantiated claims about physicians being forced from the market by high premiums, we report only real data. We know of no other published piece that provides such authoritative data.

10) Those wishing to read what the article states and see what the data shows, can obtain a copy from Health Affairs, or by sending me an email to me at mrodwin - [at] - suffolk.edu.

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Ted Frank responds: "I stand by my posting, the substance of which Professor Rodwin fails to address. I will respond in more detail over the weekend."

Update, May 22: Ted Frank responds.

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Rafael Mangual
Project Manager,
Legal Policy

Katherine Lazarski
Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.