Malpractice Insurance: Reforms must be given a chance to work

 

Dallas Morning News, Editorial
12:05 AM CDT on Friday, April 23, 2004, Page 32A

Remember the adage "the more things change, the more they stay the same"?

Well, let's hope that isn't said about medical malpractice reform in Texas.

As you might recall, medical malpractice reform was supposed to keep Texas doctors from fleeing to early retirements or new careers. Thanks to a cap on non-economic damages, insurance companies would resume writing policies that doctors could afford.

But a major medical malpractice insurer in Texas recently signaled that it thinks reform isn't working – or at least not fast enough. General Electric Medical Protective transferred its medical malpractice insurance business from the traditional rate-regulated market to a risk purchasing group, a shift that allows the company to hike rates at will and beyond what state regulators say is fair.

If you think that sounds a lot like the loophole that previously allowed home insurers to abandon state oversight and hike rates in the deregulated insurance market, you have a good memory. Not long ago, homeowners across Texas – especially those with prior mold and water damage claims – had an exceedingly tough time finding affordable insurance for precisely that reason.

General Electric Medical Protective contends it isn't defying the state or attempting to undermine the spirit of medical malpractice reform. In fact, company officials argue, doctors would be facing a 40 percent hike, instead of the current smaller increase, if it weren't for the malpractice legislation approved last year and the move to the deregulated market.

That may sound good, but remember the homeowners' experience? Rates initially dropped, but the state quickly found itself on the outside, looking helplessly at an out-of-control market for homeowners insurance.

The malpractice issue is likely to end up before a state administrative law judge who will determine the scope of the state's authority to regulate malpractice insurance rates. History is instructive. The state simply must have the authority to review insurance rates and prevent companies from seeking refuge outside the system when the going gets rough.

Regulators say at least 10 carriers are exploring the possibility of writing malpractice insurance in Texas. In time, lower rates should follow.

Reform will work – if given a chance.

 


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