What Is Mcare and Why Should You Care?
The subject of medical liability insurance can be a difficult one to navigate, particularly Pennsylvania’s Mcare fund. The program has a long and confusing history, which the Pennsylvania Medical Society has boiled down to just the essentials.
What is the Mcare Fund?
The Mcare Fund is a state-run medical liability insurance carrier. In Pennsylvania, physicians must carry $1 million in liability insurance coverage. The first $500,000 can be obtained from private insurers, risk retention groups, or the Joint Underwriting Association (JUA). The JUA is the liability insurer of last resort for physicians who can’t obtain coverage elsewhere. The second $500,000 in coverage must be purchased from the Mcare Fund.
How does the Mcare Fund work?
Unlike a traditional insurer, the Mcare Fund is a pay-as-you-go operation, setting aside no reserves to pay future claims. It simply assesses physicians, hospitals, nurse midwives, podiatrists, and nursing homes an annual surcharge equal to the amount needed to pay current claims and operating expenses. In 2005, the fund paid out claims totaling $230 million on claims that exceeded the $500,000 primary level of coverage.
How was the Mcare Fund created?
The Mcare Fund was created by the Mcare Act. Act 44, creating the Health Care Provider Retention Program. It was passed in December 2003 in response to Pennsylvania’s deepening medical liability insurance crisis. Act 44 was an amendment to the state’s Public Welfare Code, though the program has since been amended into the Mcare Act (Act 13 of 2002). The program initially was established for 2003-04 but was extended for 2005-07.
Extending the Mcare abatement program is a two-step process, requiring an amendment to Act 13 of 2002 before the end of the year, and a re-appropriation of cigarette tax revenues in the following year’s state budget.
How much does insurance from Mcare cost?
The program provides Mcare surcharge discounts to physicians who agree to remain in active practice in Pennsylvania during the year following receipt of the discount. It offers high-risk physicians (neurosurgeons, orthopedic surgeons, general surgeons, and OB-GYNs) a full 100 percent abatement of their Mcare surcharge for those two years. All other physicians receive 50 percent abatement.
How is Mcare funded?
The Mcare abatement is funded primarily through a 25 cent per pack tax on cigarettes. The state’s cigarette tax was raised (by a total of 35 cents per pack) in the 2004 budget, providing sufficient funds to support the program without dipping into revenues earmarked for other programs. The 25-cent portion of the cigarette tax generates approximately $180 million a year, an amount that is expected to slowly decrease over time.
Last Updated: 8/13/2008