Liability Insurance Discounts
Good afternoon. I’m William W. Lander, MD, President of the Pennsylvania Medical Society and a practicing family physician from Bryn Mawr.
I want to begin by thanking Chairman Micozzie and the members of this committee for inviting the Pennsylvania Medical Society to testify.
We’re here today to discuss House Bill 743, a bill that in a nutshell would require insurers to provide a 20 percent discount to their customers who institute an approved quality management program.
To begin our conversation, I want to make it clear that if—and I repeat “if”—indisputable research proves that such approved programs would generate a 20 percent savings, then the Pennsylvania Medical Society would support such a proposal. At this point, no one has shared any research on this topic with the Medical Society as proof that the percentage reduction of 20 percent is accurate.
Needless to say, physicians would be happy with a 20 percent reduction in the cost of liability insurance just like they were enthusiastic about the many patient safety initiatives that have been instituted in recent years.
Through your hard work, this General Assembly passed Act 13 of 2002. Within that Act are mandatory reporting systems and the formation of the Pennsylvania Patient Safety Authority. There is a high level of physician compliance with this reporting system.
Research collected by the Patient Safety Authority is analyzed and provides useful improvement models. The Patient Safety Authority does a good job at sharing details of its research with health care professionals so that physicians and hospitals can learn from mistakes and near misses, while implementing new procedures to provide safer patient care.
Also, as part of Act 13, physicians are now required to complete specific continuing medical education associated with patient safety and risk reduction.
In addition, a statewide Patient Safety Forum has formed, initiated by interested stakeholders who are concerned about patient safety. The Forum brings together health care organizations that have agreed to work cooperatively at improving patient safety.
And, additional work is being done in Pittsburgh through the Jewish Healthcare Foundation to address quality issues.
Plus, we shouldn’t forget that there is a significant push to utilize electronic health records. Many agree that this will prevent problems associated with errors caused by handwriting.
Without a doubt, Pennsylvania has taken the lead on patient safety.
Unfortunately, all this work has not led to a decrease in premiums. In fact, premiums remain high as payouts for malpractice claims continue to climb.
In 2002, the year the Patient Safety Authority was formed, payouts for malpractice claims in Pennsylvania totaled $398.9 million, according to information from the U.S. Health Resources and Services Administration as reported in an Associated Press news article earlier this year. By 2004, that total payout increased to $448 million, a 12.3 percent jump.
You’ll have to ask insurance companies directly how such a mandated discount would impact their book of business in Pennsylvania, but I’ll let you know that within the medical community there is considerable concern that such mandates could drive insurers out of the state. As we’ve seen in recent years, several insurers have left Pennsylvania. Unfortunately, they haven’t returned. We’re left with risk retention groups that are not regulated here in Pennsylvania, and thus we do not know how stable they are.
And, in a state like Pennsylvania that requires mandatory insurance as part of licensure, an insurer leaving the commonwealth is not good for patient care.
House Bill 743 would earn the Pennsylvania Medical Society’s support if someone could provide indisputable proof that it would generate a 20 percent savings in premiums.
Let me add that the Pennsylvania Medical Society is not sure how this bill would impact risk retention groups. You’ll recall that as insurers were leaving Pennsylvania, physicians had few options. One of the few options included joining risk retention groups. Does this bill also require risk retention groups to reduce premiums by 20 percent?
The immediate impact on the Mcare Fund also is questionable. Mcare is a pay-as-you-go system. It’s working off payments today for problems of previous years. Those claims can’t be reduced by 20 percent.
The liability insurance crisis is a very complex situation, and HB 743 stops short of addressing the complexity. Additionally, it doesn’t address any aspects of the expensive nature of our legal system.
At the current time, without indisputable proof that House Bill 743 would generate an immediate savings of 20 percent, the Pennsylvania Medical Society must remain neutral on the bill.
Thank you for the opportunity to come here today to testify before your committee.
Last Updated: 8/1/2008