Commentary - April 2002

The Malpractice Lottery -

Ticket Prices Are Just Too High

by Lyle Brennan

Unless you’ve been hiding under a rock for the last few months, you’ve seen and heard and worried a lot about the medical malpractice crisis in Nevada. This is one situation that rightly deserves to be called a "crisis." Doctors are threatening to leave the state as their insurance costs have skyrocketed. Emergency rooms in Southern Nevada are short-staffed, causing announcements encouraging the public to use them only for life-threatening situations.

I have no problem with making doctors or other health professionals pay for their mistakes. All other businesses have insurance to protect them in case they cause damage to an individual or to someone’s property. If a professional’s medical mistake caused an injury that limits your ability to work, he or she should compensate you for the value of your wages and the cost of rehabilitation. But should the professional have to pay $10 million for your "pain and suffering"? (Especially keeping in mind that the lawyer is getting a huge chunk of that, and he’s certainly not suffering).

Rising costs for health insurance make it increasingly difficult for companies to pay their employees’ insurance costs. While the insurance companies are increasing premiums at every renewal date, employees cry foul if their boss tries to pass on the higher costs in the form of increased employee contributions or reduced coverage. If a company tries to cut costs by hiring part-time people or cutting the hours of full-time people so it doesn’t have to pay insurance for them, it is branded as a profit-hungry exploiter of the working class. If it makes the sacrifice to offer a wonderful health insurance package for all its employees, the overhead can drag it down and make it increasingly difficult to hire anybody else or invest in the capital improvements it needs to expand.

At Nevada Business Journal’s roundtable for healthcare professionals, we heard horror stories about what the malpractice insurance crisis is doing to physicians as businesspeople. They can’t pass on these increased costs because they are locked into a set reimbursement amount for each medical procedure. Doctors can continue to increase their patient load to try to make up the difference, but human beings can only work so many hours a week. Do the math - if a doctor grosses $125,000 a year and has to pay $200,000 a year for malpractice insurance in Nevada, what does that leave him or her to live on? Why would physicians continue to practice here when they could go somewhere else and have a positive cash flow?

Who is the bad guy here? Trial lawyers are easy to hate – they have a reputation as ambulance chasers who go for the fattest settlement they can get for their client and then take up to half of it. They don’t care if premiums go up for every employer in the state as long as they get their piece of the pie. On the other hand, big insurance companies aren’t on anybody’s list of favorites. The trial lawyers insist that Big Insurance is just trying to make up for its investment losses in the bear market by increasing premiums for its clients. But maybe we, as voters, should also shoulder a portion of the blame. We didn’t insist on limiting awards for "pain and suffering" when we had a chance during the last legislative session. Tort reform then would probably have avoided the situation we’re in now.

This is another case where people want it all. We want the ability to cash in and get millions in case of a medical mistake – like winning a lottery. On the other hand, we want our employers to pay the full cost of the best health insurance coverage for us, and we also want doctors to be available at their local emergency room whenever they are needed. We complain about the high price of health insurance and fear (correctly) that the predicted shortage of doctors and nurses will make it difficult for our families to get the care they need. We can’t have it all. Giving up our chance to win the malpractice lottery is the only way the rest of the system is going to work.

The governor has applied a temporary Bandaid to the problem by instituting a state-funded insurance plan, but more needs to be done to arrive at a long-term solution that allows physicians and other healthcare professionals to get insurance at reasonable rates. Members of the Legislative Subcommittee to Study Medical Malpractice held hearings on March 21st and will continue to have meetings every two months until they develop a package of recommendations for legislators. The subcommittee heard many suggestions for the problem, including instituting a cap on jury awards for pain and suffering, limiting attorneys’ fees and enforcing binding arbitration for specific cases.

Gov. Guinn recently tested the political waters to see there was enough support to call a special session of the Legislature to approve money to fight the nuclear waste dump (there wasn’t). If any reason justifies the cost of a special legislative session, this would be the one. I don’t know if Nevada can wait till 2003 for a permanent solution to this crisis. We need to solve this problem before all our doctors leave the state for places where the voters have been smart enough to institute tort reform.

Lyle Brennan Publisher
COMMENTS? email: lyle@nbj.com