Medical Malpractice Insurance: Multiple Factors Have Contributed to Increased Premium Rates
Published: 2003-06-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Over the past several years, large increases in medical malpractice insurance premium rates have raised concerns that physicians will no longer be able to afford malpractice insurance and will be forced to curtail or discontinue providing certain services. Additionally, a lack of profitability has led some large insurers to stop selling medical malpractice insurance, furthering concerns that physicians will not be able to obtain coverage. To help Congress better understand the reasons behind the rate increases, GAO undertook a study to (1) describe the extent of the increases in medical malpractice insurance rates, (2) analyze the factors that contributed to those increases, and (3) identify changes in the medical malpractice insurance market that might make this period of rising premium rates different from previous such periods.
section_title: What GAO Found
paragraphs: Since 1999, medical malpractice premium rates have increased dramatically for physicians in some specialties in a number of states. However, among larger insurers in the seven states GAO analyzed, both the premium rates and the extent to which these rates have increased varied greatly. Multiple factors, including falling investment income and rising reinsurance costs, have contributed to recent increases in premium rates in our sample states. However, GAO found that losses on medical malpractice claims--which make up the largest part of insurers' costs--appear to be the primary driver of rate increases in the long run. And while losses for the entire industry have shown a persistent upward trend, insurers' loss experiences have varied dramatically across our sample states, resulting in wide variations in premium rates. In addition, factors other than losses can affect premium rates in the short run, exacerbating cycles within the medical malpractice market. For example, high investment income or adjustments to account for lower than expected losses may legitimately permit insurers to price insurance below the expected cost of paying claims. However, because of the long lag between collecting premiums and paying claims, underlying losses may be increasing while insurers are holding premium rates down, requiring large premium rate hikes when the increasing trend in losses is recognized. While these factors may explain some events in the medical malpractice market, GAO could not fully analyze the composition and causes of losses at the insurer level owing to a lack of comprehensive data. GAO's analysis also showed that the medical malpractice market has changed considerably since previous hard markets. Physician-owned and/or operated insurers now cover around 60 percent of the market, self-insurance has become more widespread, and states have passed laws designed to reduce premium rates. As a result, it is not clear how premium rates might behave during future soft or hard markets.

section_title: Letter
paragraphs: Since the late 1990s, premium rates for medical malpractice insurance have  increased dramatically for physicians in certain specialties and states.  These increases have raised concerns that many physicians will no longer  be able to afford malpractice insurance and may be forced to curtail or  discontinue providing services. These concerns have been heightened as  some large insurers, faced with declining profits, have either stopped  selling medical malpractice insurance or reduced their operations in a  number of states. But disagreement exists over the causes of increased  premium rates and what, if anything, should be done in response to the  current situation. For example, some have argued for tort reform as a  means of lowering certain awards in medical malpractice lawsuits and  advocate legislative changes at the state level designed to place a cap on  such awards. Others have argued for medical reforms as a means of  reducing the incidence of medical malpractice or for insurance reforms as  a way to moderate premium rate increases.
In response to these concerns, you asked us to determine the reasons  behind the recent increases in some medical malpractice insurance rates.   Our specific objectives were to (1) describe the extent of the increases in  medical malpractice insurance rates, (2) analyze the factors that have  contributed to the increases, and (3) identify changes in the medical  malpractice insurance market that may make the current period of rising  premium rates different from earlier periods of rate hikes. We will also issue a related report that describes the effect of rising malpractice  premiums on access to health care and related issues.
Recognizing that the medical malpractice market can vary considerably  across states, as part of our review we judgmentally selected a sample of  seven states—California, Florida, Minnesota, Mississippi, Nevada,  Pennsylvania, and Texas—in order to conduct a more in depth review in  each of those states. Our sample contains a mix of states based on the  following characteristics: extent of any recent increases in premium rates,  status as a “crisis state” according to the American Medical Association,  presence of caps on noneconomic damages, state population, and  aggregate loss ratios for medical malpractice insurers within the state.  Except where noted otherwise, our analyses were limited to these states.  Within each state, we spoke to one or both of the two largest and currently  active medical malpractice insurers, the state insurance regulator, and the  state association of trial attorneys. In six states, we spoke to the state  medical association, and in five states, we spoke to the state hospital  association. To examine the extent of increases in medical malpractice  insurance rates in our sample states, we reviewed annual survey data  collected by a private company. To analyze the factors contributing to the  premium rate increases in our sample states as well as nationally, we  reviewed data provided by medical malpractice insurers to state insurance  regulators, the National Association of Insurance Commissioners (NAIC),and A.M. Best on insurers within our sample states as well as the 15 largest  writers of medical malpractice insurance nationally in 2001 (whose  combined market share nationally was approximately 64.3 percent). We  also spoke with officials from professional actuarial and insurance  organizations and national trial attorney and medical associations and  reviewed their testimonies before Congress. In addition, we analyzed data  on medical malpractice claims collected by insurers, state regulators, and  others in our sample states as well as nationally.
To analyze how the national medical malpractice insurance market has  changed since previous periods of rising premium rates, we reviewed  studies published by NAIC, reviewed state insurance regulations and tort  laws, and spoke to the insurers and state insurance departments in our  sample states. We also spoke to officials from national professional  actuarial, legal, and insurance organizations. Appendix I contains a more  detailed description of our methodology.
subsections: section_title: Background
paragraphs: Nearly all health care providers, such as physicians and hospitals, purchase  insurance that covers expenses related to medical malpractice claims,  including payments to claimants and legal expenses. The most common  physician policies provide $1 million of coverage per incident and  $3 million of coverage per year. Today the primary sellers of physician  medical malpractice insurance are the physician-owned and/or operated  insurance companies that, according to the Physician Insurers Association  of America, insure approximately 60 percent of all physicians in private  practice in the United States. Other health care providers may obtain  coverage through commercial insurance companies, mutual coverage  arrangements, or state-run insurance programs, or may self-insure (take  responsibility for claims themselves). Most medical malpractice insurance  policies offer claims-made coverage, which covers claims reported during  the year in which the policy is in effect. A small and declining number of  policies offer occurrence coverage, which covers all claims arising out of  events that occurred during the year in which the policy was in effect.
Medical malpractice insurance operates much like other types of  insurance, with insurers collecting premiums from policyholders in  exchange for an agreement to defend and pay future claims within the  limits set by the policy. Insurers invest the premiums they collect and use  the income from those investments to reduce the amount of premium  income that would have been required otherwise. Claims against a  policyholder are recorded as expenses, or incurred losses, which are equal  to the amount paid on those claims as well as the insurer’s estimate of  future losses on those same claims. The liability associated with the  portion of these incurred losses that have not yet been paid by the insurer  is collectively known as the insurer’s loss reserve. In order to maintain  financial soundness, insurers must maintain assets in excess of total  liabilities—including loss reserves and reserves for premiums received but  not yet earned—to make up what is known as the insurer’s surplus. State  insurance departments monitor insurers’ solvency by tracking, among  other measures, the ratio of total annual premiums to this surplus. Medical  malpractice insurers generally attempt to keep their surplus approximately  equal to their annual premium income.
Medical malpractice insurers establish premium base rates for particular  medical specialties within a state and sometimes for particular geographic  regions within a state. Insurers may also offer discounts or add surcharges  for the particular characteristics of policyholders, such as claim histories  or whether they participate in risk-management programs. The premium  rates are based on anticipated losses on claims and related expenses,  expected investment income, the need to build a surplus, and, for for-profit  insurers, the desire to earn a reasonable profit for shareholders. In most  states the insurance regulators have the authority to approve or deny  proposed changes to premium rates.
For several reasons, accurately predicting losses on medical malpractice  claims is difficult. First, according to a national insurer association we  spoke with, most medical malpractice claims take an average of more than  5 years to resolve, including discovering the malpractice, filing a claim,  determining (through settlement or trial) payment responsibilities, if any,  and paying the claim. In addition, some claims may not be resolved for as  long as 8 to 10 years. As a result, insurers often must estimate costs years in  advance. Second, the range of potential losses is wide. Actuaries we spoke  with told us that individual claims with similar characteristics can result in  very different losses for the insurer, making it difficult to predict the  ultimate cost of any single claim. Third, the predictive value of historical  data is further limited by the often small pool of relevant policyholders. For  example, a relevant pool of policyholders would be physicians practicing a  particular specialty within a specific state and perhaps within a specific  geographic area within that state. In smaller states, and for some of the less  common but more risky specialties, this pool could be very small and  provide only a limited amount of data that could be used to estimate future  costs.
Medical malpractice insurance is regulated by state insurance departments  and subject to state laws. That is, insurers selling medical malpractice  insurance in a particular state are subject to that state’s regulations for  their operations within that state, and all claims within that state are  subject to that state’s tort laws. Insurance regulations can vary across  states, creating differences in the way insurance rates are regulated. For  example, one state insurance regulator we spoke with essentially let the  insurance market determine appropriate rates, while another had an  increased level of review, including approving specific company rates on a  case-by-case basis. NAIC assists state insurance regulators in developing  these regulations by providing guidance, model (or recommended) laws  and guidelines, and information-sharing tools.
In response to concerns over rising premium rates, physicians, medical  associations, and insurers have pushed for state and federal legislation that  would, among other things, limit the amount of damages paid out on  medical malpractice claims. A few states have passed legislation with such  limitations over the past several years, and federal legislation is pending.  On March 13, 2003, the House of Representatives passed the Help Efficient,  Accessible Low-Cost, Timely Healthcare (HEALTH) Act of 2003, which  includes, among other things, a limit on certain types of damages in  medical malpractice claims. On March 12, 2003, a similar bill of the same  name was introduced in the Senate, but as of June 2003, no additional  action had been taken.
section_title: Both the Extent of Increases in Medical Malpractice Premium Rates and the Rates Themselves Varied across Specialties and States
paragraphs: Beginning in 1999 and 2000, medical malpractice insurers in our seven  sample states increased their premium rates for the physician specialties  of general surgery, internal medicine, and obstetrics/gynecology faster than  they had since at least 1992. These specialties were the only ones for which  data were available, and 1992 was the earliest year for which we could  obtain comprehensive survey data. However, both the extent of these  changes and the level of the premium rates insurers charged varied greatly  across medical specialties, states, and even areas within states. From 1999  through 2002, one large insurer raised rates more for internal medicine  than for general surgery, while another raised rates 12 times more for  general surgery than for internal medicine. Changes in premium base rates  among some of the largest insurers in each state ranged from a reduction of  about 9 percent for obstetricians and gynecologists insured by one  California company to an increase of almost 170 percent for doctors in the same specialty in one area of Pennsylvania. At the same time, premium  rates for the same amount of coverage for the same medical specialty  varied by a factor of as much as 17 among states—that is, the rate in one  state was 17 times higher than the rate in a different state.
subsections: section_title: Premium Rates Have Grown Rapidly since 1998 for Certain Specialties in Some States
paragraphs: As figure 1 shows, premium base rates varied across our seven sample  states from 1992 to 1998 but for most insurers remained relatively flat.  Beginning in 1999 and 2000, however, most of these insurers began  increasing their rates in larger increments. Many of the increases were  dramatic, ranging as high as 165 percent, although some rates remained  flat. Figure 2 shows the percentage increase in premium rates for the  largest insurers in our seven sample states from 1999 through 2002.  In the  Harrisburg area of Pennsylvania, for example, the largest insurer increased  premium base rates dramatically for three specialties: obstetrics/  gynecology (165 percent), general surgery (130 percent), and internal  medicine (130 percent). At the same time, the consumer price index (CPI)  increased by 10 percent. However, in California and Minnesota, premium  base rates for the same specialties rose between 5 and 21 percent and in  some cases fell slightly. The variations in the changes in premium base  rates among our sample states appears to be consistent with the changes in  states outside our sample, with insurers in some states raising premium  rates rapidly after 1999 and insurers in other states raising them very little.
section_title: The Level of Premium Rates Also Varied across Specialties and States
paragraphs: We found that premium rates quoted by insurers in our seven sample states  varied across medical specialties and states. According to some of the  insurers and actuaries we spoke with, the differences in rates reflect the  costs associated with medical malpractice claims against physicians in  particular specialties. Specialties with a high risk of large or frequent losses  on medical malpractice claims will have higher premium rates. For  example, in 2002 the largest medical malpractice insurer in Texas quoted a  base rate for the same level of coverage of $92,000 to obstetricians and  gynecologists, $71,000 to general surgeons, and $26,000 to internists. Figure  3 shows the premium rates quoted by the largest medical malpractice  insurers in our sample states for these three specialties.
Premium rates quoted by insurers in our seven sample states for the same  medical specialty also varied across states and geographic areas within  states (see fig. 3).  Some of the insurers and actuaries we spoke with told us  that these variations also reflect differences in insurers’ loss experiences in  those venues.  As figure 3 shows, the largest insurer in Florida quoted a  premium base rate of $201,000 for obstetricians and gynecologists in Dade  County, while the largest insurer in California quoted a premium based rate  of $36,000 for similar physicians in northern California.  Within Florida, the  same large insurer quoted a premium base rate of $103,000 for  obstetricians and gynecologists outside of Dade County—approximately 51  percent of the Dade County rate.  Within Pennsylvania, the largest insurer  quoted a premium base rate of $64,000 for doctors in Philadelphia— approximately 83 percent more than the rate it quoted outside the city.
section_title: Multiple Factors Have Contributed to the Increases in Medical Malpractice Premium Rates
paragraphs: Insurers’ losses, declines in investment income, a less competitive climate,  and climbing reinsurance rates have all contributed to rising premium  rates. First, among our seven sample states, insurers’ losses have increased  rapidly in some states, increasing the amount that insurers expect to pay  out on future claims. Second, on the national level insurers’ investment  income has decreased, so that insurance companies must increasingly rely  on premiums to cover costs. Third, some large medical malpractice  insurers have left the market in some states because selling policies was no  longer profitable, reducing the downward competitive pressure on  premium rates that existed through most of the 1990s. Last, reinsurance  rates for some medical malpractice insurers in our seven sample states  have increased substantially, increasing insurers’ overall costs. In  combination, all the factors affecting premium rates and the availability of  medical malpractice insurance contribute to the medical malpractice  insurance cycle of hard and soft markets. While predicting the length, size  and turning points of a cycle may be impossible, it is clear that the  relatively long period of time required to resolve medical malpractice  claims makes the cycles more extreme in this market than in other  insurance markets.
subsections: section_title: Increased Losses on Claims Are the Primary Contributor to Higher Medical Malpractice Premium Rates
paragraphs: Like premium increases, annual paid losses and incurred losses for the  national medical malpractice insurance market began to rise more rapidly  beginning in 1998. After adjusting for inflation, we found that the average  annual increase in paid losses from 1988 to 1997 was approximately 3.0  percent but that this rate rose to 8.2 percent from 1998 through 2001.  Inflation-adjusted incurred losses decreased by an average annual rate of  3.7 percent from 1988 to 1997 but increased by 18.7 percent from 1998 to  2001. Figure 4 shows paid and incurred losses for the national medical  malpractice market from 1975 to 2001, adjusted for inflation.
Paid and incurred losses give different pictures of an insurer’s loss  experience, and examining both can help provide a better understanding of  an insurer’s losses. Paid losses are the cash payments an insurer makes in  a given year, irrespective of the year in which the claim giving rise to the  payment occurred or was reported. Most payments made in any given year  are for claims that were reported in previous years. In contrast, incurred  losses in any single year reflect an insurer’s expectations of the amounts  that will be paid on claims reported in that year. Incurred losses for a given  year will also reflect any adjustments an insurer makes to the expected  amounts that must be paid out on claims reported during previous years.  That is, as more information becomes available on a particular claim, the  insurer may find that the original estimate was too high or too low and  must make an adjustment. If the original estimate was too high, the  adjustment will decrease incurred losses, but if the original estimate was  too low, the adjustment will increase them.
Incurred losses are the largest component of medical malpractice insurers’  costs. For the 15 largest medical malpractice insurers in 2001—whose  combined market share nationally was approximately 64.3 percent— incurred losses (including both payments to plaintiffs to resolve claims and  the costs associated with defending claims) comprised, on average, around  78 percent of the insurers’ total expenses. Because insurers base their  premium rates on their expected costs, their anticipated losses will  therefore be the primary determinant of premium rates.
The recent increases in both paid and incurred losses among our seven  sample states varied considerably, with some states experiencing  significantly higher increases than others. From 1998 to 2001, for example,  paid losses in Pennsylvania and Mississippi increased by approximately  70.9 and 142.1 percent, respectively, while paid losses in California and  Minnesota increased by approximately 38.7 and 8.7 percent, respectively  (see fig. 5). Because paid losses in any single year reflect primarily claims  reported during previous years, these losses may not be representative of  claims that were reported during the year the losses were paid.
From 1998 to 2001, aggregate incurred losses increased by large amounts in  almost all of our seven sample states. As shown in figure 6, the highest  rates of increase in incurred losses over that period were experienced by  insurers in Mississippi (197.5 percent) and Pennsylvania (97.2 percent).  Even in California and Minnesota, states with lower paid losses from 1998  through 2001, insurers experienced increases in incurred losses of  approximately 40.5 and 73.2 percent, respectively, over the same period. As  noted above, incurred losses in any single year reflect insurers’  expectations of future paid losses associated with claims reported in the  current year—that is, claims that will be paid, on average, over the next 3  and one-half years (according to one industry association). And because  insurers’ incurred losses have increased recently, insurers are expecting  their paid losses to increase over the next several years.
According to actuaries and insurers we spoke with, increased paid losses  raise premium rates in several ways. First, higher paid losses on claims  reported in current or previous years can increase insurers’ estimates of  what they expect to pay out on future claims. Insurers then raise premium  rates to match their expectations. In addition, large losses (particularly  paid losses) on even one or a few individual claims can make it harder for  insurers to predict the amount they might have to pay on future claims.  Some insurers and actuaries we spoke with told us that when losses on  claims are hard to predict, insurers will generally adopt more conservative  expectations regarding losses—that is, they will assume losses will be  toward the higher end of a predicted range of losses. Further, large losses  on individual claims can raise plaintiffs’ expectations for damages on  similar claims, ultimately resulting in higher losses across both claims that  are settled and those that go to trial. As described above, this tendency in  turn can lead to higher expectations of future losses and thus to higher  premium rates. Finally, an increase in the percentage of claims on which  insurers must make payments can increase the amount that insurers expect  to pay on each policy, resulting in higher premium rates. That is, insurers  expecting to pay out money on a high percentage of claims may charge  more for all policies in order to cover the expected increases.
subsections: section_title: Comprehensive Data on the Composition and Causes of Increased Losses Were Lacking
paragraphs: A lack of comprehensive data at the national and state levels on insurers’  medical malpractice claims and the associated losses prevented us from  fully analyzing both the composition and causes of those losses at the  insurer level. For example, comprehensive data that would have allowed  us to fully analyze the severity of medical malpractice claims at the insurer  level on a state-by-state basis did not exist. To begin with, data submitted  by insurers to NAIC on the number of claims reported to insurers are not  broken out by state. Rather, insurers that operate in a number of states  report the number of claims for all their medical malpractice insurance  policies nationwide. Also, while NAIC does collect data that can be used to  measure the severity of claims paid in a single year (number of claims per  state), NAIC began this effort only in 2000. As a result, we could not gather  enough data to examine trends in the severity of paid claims from 1998 to  2002 at the insurer level. Similarly, comprehensive data did not exist that  would have allowed us to analyze claim frequency on a state-by-state basis.  As noted above, data that insurers submit to NAIC on the number of claims  reported were not broken out by state prior to 2000. In addition, insurers do  not submit information on the number of policies in effect or the number of  health care providers insured. Finally, medical associations we spoke with  in our sample states had not compiled accurate data on the number of  physicians practicing within those states. As a result, we could not analyze  changes in the frequency of medical malpractice claims in our sample  states at the insurer level.
Data that would have allowed us to analyze how losses were divided  between settlements and trial verdicts or between economic and  noneconomic damages were also not available. First, insurers do not  submit information to NAIC on the portion of losses paid as part of  settlements and the portion paid as the result of a trial verdict, and no other  comprehensive source of such information exists. However, all eight  insurers and one of the trial lawyers’ associations we spoke with provided  certain estimates about claims. The estimates of three insurers on the  percentage of claims resulting in trial verdicts ranged from 5 to 7 percent.  The estimates of four insurers and 1 state trial lawyers’ association of the  percentage of trial verdicts being decided in favor of the insured defendant  ranged from 70 to 86 percent. The estimates of four insurers and one state  trial lawyers’ association of the portion of claims resulting in payment to  the plaintiff ranged from 14 to 50 percent. Second, no comprehensive  source of information exists on the breakdown of losses between  economic damages, such as medical costs and lost wages, and  noneconomic damages, such as compensation for pain and suffering.   Several of the insurers and trial lawyers’ associations we spoke with noted  that settlement amounts are not formally divided between these two types  of damages and that consistent, comprehensive information on trial  judgments is not collected. Furthermore, while judgment amounts obtained  at trial may be large, several of the insurers we spoke with said that they  most often do not pay amounts beyond a policyholder’s policy limits.   Data on the final amounts insurers pay out on individual judgments are not  collected, although they are reported in the aggregate as part of paid losses  in insurers’ financial statements.
While losses on medical malpractice claims increase as the cost of medical  care and the value of lost wages rise, losses in some states have far  outpaced such inflation. Insurance, legal, and medical industry officials we  spoke with suggested a number of potential causes for such increases.  These potential causes included a greater societal propensity to sue; a  “lottery mentality,” where a lawsuit is seen as an easy way to get a large  sum of money; a sicker, older population; greater expectations for medical  care because of improved technology; and a reduced quality of care and the  breakdown of the doctor-patient relationship owing, for example, to factors  such as the increasing prevalence of managed care organizations. While we  could not analyze such potential causes for increased losses,  understanding them would be useful in developing strategies to address  increasing medical malpractice premium rates. That is, because losses on  claims have such a profound effect on premium rates, understanding the  reasons those losses have increased could make it easier to devise actions  to control the rise in premium rates.
section_title: Medical Malpractice Insurers’ Investment Income Has Decreased
paragraphs: State laws restrict medical malpractice insurers to conservative  investments, primarily bonds. In 2001, the 15 largest writers of medical  malpractice insurance in the United States  invested, on average, around  79 percent of their investment assets in bonds, usually some combination  of U.S. Treasury, municipal, and corporate bonds. While the performance of  some bonds has surpassed that of the stock market as a whole since 2000,  annual yields on selected bonds since 2000 have decreased steadily since  then (table 1).
We analyzed the average investment returns of the 15 largest medical  malpractice insurers of 2001 and found that the average return fell from  about 5.6 percent in 2000 to an estimated 4.0 percent in 2002. However,  none of the companies experienced a net loss on investments at least  through 2001, the most recent year for which such data were available.  Additionally, almost no medical malpractice insurers overall experienced  net investment losses from 1997 to 2001.
Medical malpractice insurers are required by state insurance regulations to  reflect expected investment income in their premium rates. That is,  insurers are required to reduce their premium rates to consider the income  they expect to earn on their investments. As a result, when insurers expect  their returns on investments will be high, as returns were during most of  the 1990s, premium rates can remain relatively low because investment  income covers a larger share of losses on claims. Conversely, when  insurers expect their returns on investments will be lower—as returns have  been since around 2000—premium rates rise in order to cover a larger  share of losses. During periods of relatively high investment income,  insurers can lose money on the underwriting portion of their business yet  still make a profit. That is, losses from medical malpractice claims and the  associated expenses may exceed premium income, but income from  investments can still allow the insurer to operate profitably. Insurers are  not allowed to increase premium rates to compensate for lower-than-  expected returns on past investments but must consider only prospective  income from investments.
None of the insurers that we consulted regarding this issue told us  definitively how much the decreases in investment income had increased  premium rates. But we can make a rough estimate of the relationship  between return on investment and premium rates. When investment  income decreases, holding all else constant, income from premium rates  must increase by an equal amount in order for the insurer to maintain the  same overall level of income. Thus the total amount of investment assets  relative to premium income determines how much rates need to rise to  compensate for lost investment income. Table 2 presents a hypothetical  example. An insurer has $100,000 in investment assets and in the previous  year received $25,000 in premium income, for a ratio of investment assets  to premium income of 4 to 1. If the return on investments drops 1  percentage point and all else remains constant, the insurer must raise  premium rates by 4 percent in order to compensate for the reduced  investment income. If the return on investments drops by 2 percentage  points, premium rates must rise by 8 percent to compensate.
This relationship can be applied to the 15 largest medical malpractice  insurers—countrywide—from 2001. Data show that in 2001 the insurers’  total investment assets were, on average, around 4.5 times as large as the  amount of premium income they earned for that year. Applying the  relationship established above and holding other factors constant, a drop  of 1 percentage point in return on investments would translate into roughly  a 4.5 percent increase in premium rates. As a result, if nothing else  changed, the approximately 1.6 percentage point drop in the return on  investments these insurers experienced from 2000 through 2002 would  have resulted in an increase in premium rates of around 7.2 percent over  the same 2-year period.
section_title: Downward Pressure on Premium Rates Has Decreased as Profitability Has Declined
paragraphs: Since 1999, the profitability of the medical malpractice insurance market as  a whole has declined—even with increasing premium rates—causing some  large insurers to pull out of this market, either in certain states or  nationwide. Because fewer insurers are offering this insurance, there is less  price competition and thus less downward pressure on premium rates.  According to some industry and regulatory officials in our seven sample  states, price competition during most of the 1990s kept premium rates from  rising between 1992 and 1998, even though losses generally did rise. In  some cases, rates actually fell. For example, during this period premium  rates for obstetricians and gynecologists covered by the largest insurer in  Florida—a state where these physicians are currently seeing rapid  premium rate increases—actually decreased by approximately 3.1 percent.  Some industry participants we spoke with told us that, in hindsight,  premium rates charged by some insurers during this period may have been  lower than they should have been and, after 1998, began rising to a level  more in line with insurers’ losses on claims. Some industry participants  also pointed out that this pricing inadequacy was masked to some extent by  insurers’ adjustments to expected losses on claims reported during the late  1980s as well as their high investment income. For many insurers the  incurred losses associated with the policies sold during the late 1980s  turned out to be higher than the actual losses for the same policies,  resulting in high levels of reserves. During the 1990s, as insurers eliminated  these redundant reserves by adjusting their current loss reserves for these  previous overestimates, current calendar year incurred losses fell and  reported income increased. These adjustments, together with relatively  high levels of investment income, allowed insurers to keep premium rates  flat and still remain profitable.
subsections: section_title: Selling Medical Malpractice Insurance Has Become Less Profitable
paragraphs: Beginning in the late 1990s, medical malpractice insurers as a whole began  to see their profits fall. Figure 7 shows the return on surplus—also called  return on equity—for the medical malpractice insurance industry as a  whole. Profitability began declining faster in 1998 and in 2001 dropped  considerably even as premium rates were increasing in many states,  resulting in a negative rate of return, or loss. Some of the factors pushing  premium rates upward were also factors in insurers’ declining profitability:  higher losses on medical malpractice claims, higher reinsurance costs, and  falling investment income.
Medical malpractice insurers in some of our sample states have  experienced particularly low levels of profitability since around 1998 (see  fig. 8). The loss ratio reported here is the ratio of incurred losses, not  including other expenses (often referred to as loss adjustment expenses)  related to resolving those claims, to the amount of premiums earned in a  given year. Loss ratios above 100 percent indicate that an insurer has  incurred more losses than premium payments, a sign of declining  profitability. Loss ratios in all seven sample states have increased since  1998, and except for California, all had loss ratios of more than 100 percent  for 2001.
This declining profitability has caused some large insurers either to stop  selling medical malpractice policies altogether or to reduce the number  they sell. For example, beginning in 2002 the St. Paul Companies— previously the second-largest medical malpractice insurer in the United  States—stopped writing all medical malpractice insurance because of  declining profitability. In 2001, St. Paul had sold medical malpractice  insurance in every state and was the largest or second-largest seller in 24  states. St. Paul was not alone. Other large insurers have also stopped  selling medical malpractice insurance in since 1999: PHICO Insurance  Company, which sold insurance primarily in six states, including Florida,  Pennsylvania, and Texas; MIIX Insurance Company, which sold insurance  primarily in five states, including New Jersey and Pennsylvania; and  Reciprocal of America, which sold insurance primarily in six states,  including Alabama, Mississippi, and Virginia. Other insurers reduced the  number of states in which they sold medical malpractice insurance: SCPIE  Indemnity Company, which in March 2003 essentially stopped selling  insurance outside of California, and First Professionals Insurance  Company, which has said that beginning in 2003 it will essentially stop  selling insurance outside of Florida.
When a large insurer leaves a state insurance market, the supply of medical  malpractice insurance decreases, and the remaining insurers may not need  to compete as much on the basis of price. In addition, the remaining  insurers are limited in the amount of insurance they can supply to fill the  gap, because state insurance regulations limit the amount of insurance they  can write relative to their surplus (the amount by which insurers’ assets  exceed their liabilities). For mutual, nonprofit insurers, increasing the  surplus can be a slow process, because surplus must generally be built  through profits or by obtaining additional funds from policyholders.  Commercial insurers can obtain funds through capital markets, but even  then, convincing investors to invest funds in medical malpractice insurance  when profits are falling can be difficult.
section_title: Remaining Insurers Have Increased Prices to Reflect Expected Losses
paragraphs: According to industry participants and observers, as the competitive  pressures on premium rates decreased, it appears that insurers were able  to more easily and more quickly raise premium rates to a level more in line  with their expected losses. That is, absent competitive pressure that may  have caused insurers to keep premium rates at lower levels, which in  hindsight were perhaps too low for the ultimate losses the insurers would  have to pay, it appears that insurers were able to raise premium rates to  match their loss expectations. As noted earlier, losses increased to a great  extent in some states, and thus some insurers may have increased premium  rates dramatically.
While it appears clear that a reduction in price competition has allowed  insurers to more easily and more quickly increase premium rates to a level  more in line with insurers’ expected losses, we identified at least three  factors that seem to suggest that these premium rates are not inconsistent  with expected losses. First, if the higher premium rates were above what  was justified by insurers’ expected losses, profitability would be increasing.  But profits are not increasing, indicating that insurers are not charging and  profiting from excessively high premium rates. Second, according to some  industry participants we spoke with, physician-owned insurers have little  incentive to overcharge their policyholders because those insurers  generally return excess earnings to their policyholders in the form of  dividends. Third, in most states the insurance regulators have the authority  to deny premium rate increases they deem excessive. While the  information that state regulators require insurers to submit as justification  for premium rate increases varies across states, in general it includes data  on expected losses.
section_title: Reinsurance Premium Rates Have Increased
paragraphs: A further reason for recent increases in medical malpractice premium rates  in our seven sample states was that the cost of reinsurance for these  insurers has also increased, increasing the total expenses that premium  and other income must cover. Insurers in general purchase reinsurance, or  excess loss coverage, to protect themselves against large unpredictable  losses. Medical malpractice insurers, particularly smaller insurers, depend  heavily on reinsurance because of the potential high payouts on medical  malpractice claims.
Reinsurance industry officials and medical malpractice insurers we spoke  with told us that reinsurance premium rates have increased for two  reasons. First, reinsurance rates overall have increased as a result of  reinsurers’ losses related to the terrorist attacks of September 11, 2001.  Second, reinsurers have seen higher losses from medical malpractice  insurers and have raised rates to compensate for the increased risk  associated with providing reinsurance to the medical malpractice market.  Some insurers and industry participants told us that reinsurance premium  rates had risen substantially since 1998, with the increases ranging from 50  to 100 percent. Other insurers told us that in order to keep their  reinsurance premium rates down, they increased the dollar amount on any  loss at which reinsurance would begin, essentially increasing the  deductible. Thus, while reinsurance rates may not have increased, the  amount of risk the medical malpractice insurers carry did. One insurer  estimated that while its reinsurance rates had increased approximately 50  percent from 2000 to 2002, this increase had resulted in only a 2 to 3  percent increase in medical malpractice premium rates.
section_title: The Medical Malpractice Insurance Market Moves through Hard and Soft Insurance Markets
paragraphs: All of the factors affecting premium rates and availability contribute to the  length and amplitude of the medical malpractice insurance cycle. Like  other property-casualty insurance markets, the medical malpractice  market moves through cycles of “hard” and “soft” markets. Hard markets  are generally characterized by rapidly rising premium rates, tightened  underwriting standards, narrowed coverage, and often by the departure of  some insurers from the market. In the medical malpractice market, some  market observers have characterized the period from approximately 1998  to the present as a hard market. (Previous hard markets occurred during  the mid-1970s and mid-1980s.)  Soft markets are characterized by slowly  rising premium rates, less stringent underwriting standards, expanded  coverage, and strong competition among insurers. The medical malpractice  market from 1990 to 1998 has been characterized as a soft market.  According to a series of studies sponsored and published by NAIC in 1991,  such cycles have been present in the property-casualty insurance market  since at least 1926, and until the mid-1970s lasted for an average of  approximately 6 years from the peak of one hard market to the next.  However, the cycle that began at the peak of the hard market in 1975 lasted  for around 10 years. The current cycle has lasted for around 17 years— since 1985—and it is not yet clear that the current hard market has peaked.
subsections: section_title: Cycles in the Medical Malpractice Market Tend to Be Volatile
paragraphs: The medical malpractice insurance market appears to roughly follow the  same cycles as the overall property-casualty insurance market, but the  cycles tend to be more volatile—that is, the swings are more extreme. We  analyzed the swings in insurance cycles for the medical malpractice market  and for the entire property-casualty insurance markets using annual loss  ratios based on incurred losses (see fig. 9). Our analysis showed that  annual loss ratios for medical malpractice insurers tended to swing higher  or lower than those for property-casualty insurers as a whole, reflecting  more extreme changes in insurers’ expectations. Because premium rates  are based largely on insurers’ expectations of losses, premium rates will  fluctuate as well.
The medical malpractice insurance market is more volatile than the  property-casualty insurance market as a whole because of the length of  time involved in resolving medical malpractice claims and the volatility of  the claims themselves. Several years may pass before insurers know and  understand the profits and losses associated with policies sold in a single  year. As a result, insurers may not know the full effects of a change in an  underlying factor, such as losses or return on investments, for several  years. So while insurers in other markets that do not have protracted  claims resolutions can adjust loss estimates and premium rates more  quickly to account for a change in an underlying factor, medical  malpractice insurers may not be able to make adjustments for several  years. In the interim, medical malpractice insurers may unknowingly be  under- or over-pricing their policies.
When insurers do fully understand the effects of a change in an underlying  factor, they may need to make large adjustments in loss estimates and  premium rates. As a result, premium rates in the medical malpractice  insurance market may move more sharply than premium rates in other  lines of property-casualty insurance. For example, if insurers have been  unknowingly overestimating their losses and overpricing their policies, as  some insurers told us happened during the late 1980s, large liabilities build  up to cover the losses. When the insurers realize their estimates have been  too high, they must reduce those liabilities to reflect their losses accurately.  Reducing liabilities also reduces incurred losses and therefore increases  insurers’ income, allowing insurers to charge lower premium rates even in  the face of increased losses and still maintain profitable operations—a  point some insurers made about the 1990s. But when the liability account  has been reduced sufficiently and income is no longer increasing as a result  of this adjustment, insurers may need to raise premium rates to stay  profitable.
The competition that can exist during soft markets and periods of high  investment income can further exacerbate swings in premium rates. As  noted earlier, competition among insurers can put downward pressure on  premium rates, even to the point at which the rates may, in hindsight,  become inadequate to keep an insurer solvent. When the insurance market  hardens, some insurers may leave the market, removing the downward  pressure on premium rates and allowing insurers to raise premium rates to  the level that would have existed without such competition. Because  competition may have kept rates low, the resulting increase in premium  rates that accompanies a transition to a hard market may be greater than it  would have been otherwise.
According to some industry experts, periods of high investment income  can bolster the downward pressure that exists during soft markets. That is,  high investment income can contribute to the increased profitability of an  insurance market. This profitability can, in turn, cause insurers to compete  for market share in order to take advantage of that profitability, thereby  forcing premium rates even lower. In addition, according to these industry  experts, high investment income allows insurers to keep premium rates  low for long periods of time, even in the face of increasing losses, because  investment income can be used to replace premium income, allowing  insurers to meet expenses. But if interest rates drop at the same time the  market hardens (and reduced interest rates can be a contributor to the  movement to hard market), insurers may have to increase premium rates  much more in a shorter period of time than they would have if investment  income had not allowed premium rates to remain lower to begin with.
section_title: Predicting and Moderating the Cycle is Difficult
paragraphs: While the medical malpractice insurance market will likely move through  more soft and hard markets in the future, predicting when such moves  might occur or the extent of premium rate changes is virtually impossible.  For example, the timing and extent of the unexpected changes in the losses  that some researchers believe are responsible for hard markets are  virtually impossible to predict. In addition, as we have seen, many factors  affect premium rates, and it is just as difficult to predict the extent of any  future changes these factors might undergo. While interest rates may be  high during soft markets, it is not possible to predict how much higher they  might be in the future and thus what effect they might have on premium  rates. Predicting changes in losses on medical malpractice claims would be  even harder, given the volatility of such losses. Further, some of the factors  affecting premium rates, such as losses and competition, vary across  states, and the effect of soft or hard markets on premium rates in one state  could not be generalized to others. Finally, other conditions affecting  premium rates have changed since earlier hard and soft markets, limiting  our ability to make accurate comparisons between past and future market  cycles.
Similarly, agreement does not exist on whether or how insurance cycles  could be moderated. The NAIC studies mentioned above noted that the  most likely primary causes of insurance cycles—changes in interest rates  and losses—were not subject to direct insurer or regulatory control. In  addition, the studies also observed that underpricing by insurers during  soft markets likely increases the severity of premium rate increases during  the next hard market. But they did not agree on the question of using  regulation to prevent such swings in premium rates. Such regulation could  be difficult, for two reasons. First, because losses on medical malpractice  claims are volatile and difficult to predict, regulators could have difficulty  determining the appropriate level of premium rates to cover those losses.  In addition, restricting premium rate increases during hardening markets  could hurt insurer solvency and cause some insurers to withdraw from a  market with an already declining supply of insurance.
section_title: The Medical Malpractice Insurance Market Has Changed since Previous Hard Markets
paragraphs: The medical malpractice insurance market as a whole has changed  considerably since the hard markets of the mid-1970s and mid-1980s. These  changes have taken place over time and have been the result primarily of  actions insurers, health care providers, and state regulators have taken to  address rising premium rates. For example, insurers have moved from  occurrence-based to claims-made policies, physicians have formed mutual  nonprofit insurance companies that have come to dominate the market,  hospitals and groups of hospitals or physicians have increasingly chosen to  self-insure, and states have passed laws designed to slow the increase in  medical malpractice premium rates.
subsections: section_title: Beginning in the 1970s, Insurers Began Selling Claims-Made Rather Than Occurrence-Based Policies
paragraphs: In order to more accurately predict losses and set premium rates, in the  mid-1970s most medical malpractice insurers began to change the type of  insurance policy they offered to physicians from occurrence based to  claims made. As we have noted, claims-made policies cover claims  reported during the year the policy is in effect, while occurrence-based  policies cover claims arising out of events that occurred during the year in  which the policy was in effect. Because claims-made policies cover only  reported claims, insurers can better estimate the payouts they will have to  make in the future.  Occurrence-based policies do not provide such  certainty, because they leave insurers liable for claims related to the  incidents that occurred during a given year, including those not yet  reported to the insurer.
Claims-made policies can create difficulties for physicians needing or  wanting to change insurers, however, because the physician rather than the  insurer retains the risk of claims that have not yet been reported to the  insurer. However, most companies today offer separate policies providing  coverage for claims resulting from incidents that may have occurred but  were not reported before the physician switched companies. The vast  majority of policies in existence today are claims-made policies. In each of  the seven states we studied, for example, the leading insurer’s policies were  predominantly (if not exclusively) claims-made. This change in the type of  policy sold means that any changes to premium rates during future hard or  soft markets may differ from such changes in previous such markets.
section_title: Beginning in the Mid-1970s, Groups of Physicians Joined Together to Form Mutual Insurance Companies
paragraphs: Faced with a surge in the frequency and severity of claims, many of the for- profit insurers left the medical malpractice insurance market in the mid- 1970s. At the time, medical malpractice insurance was only a small portion  of most of the insurers’ overall business, so many companies chose simply  to discontinue their medical malpractice lines. However, this market  exodus led to a crisis of availability for physicians who wanted or needed  professional liability insurance. In response to this unmet demand,  physicians, often in connection with their state medical societies, joined  together to form physician-owned insurance companies. Initially,  physicians often needed to contribute capital in addition to their premiums  so that the companies would meet state capitalization requirements.
These new physician-owned insurance companies differed from existing  commercial carriers in several ways. First, the physician-owned companies  wrote predominantly claims-made policies, which, as previously discussed,  allowed the insurers to more accurately predict losses and set premium  rates. Second, in their initial years the new companies themselves enjoyed  significant short-term cost savings over commercial companies. Most  medical malpractice claims take several years to be resolved, and the  policies offered by the physician-owned companies covered only future  incidents of malpractice, so the companies had no existing claims that  needed to be paid immediately. The commercial companies’ occurrence- based policies continued to provide coverage for malpractice that had  occurred before the new physician-owned companies began offering  policies. Thus the physician-owned companies would not incur the same  level of obligations as the existing carriers for several years, allowing the  physicians to pay an amount similar to the commercial premium and use  much of that money as capital contributions to surplus. Physician-owned  companies have several other advantages. To begin with, physician-owned  companies have a cost advantage because they do not need to provide  shareholders with profits. In addition, the physician-owned companies may  have some underwriting advantages over the for-profit entities, such as an  intimate knowledge of local doctors and hospitals and the legal customs  and climate. Finally, several insurers told us that these physician-owned  companies may have a different management philosophy than for-profit  companies, one that places greater emphasis on risk management and thus  lowers the incidence of claims. This philosophy may also extend to  defending claims more aggressively than traditional insurers.
Physician-owned and/or operated insurance companies have grown to  dominate the medical malpractice insurance market, despite the fact that  most of them have not had the same access to the traditional capital  markets as for-profit insurers and therefore have had to build up their  surplus through premiums and capital contributions. Although several  physician-owned and/or operated insurance companies have expanded  their geographic presence and lines of insurance in the last decade, most of  these companies write insurance primarily in one state or a few states and  usually sell only medical malpractice liability insurance. Further, many of  the companies that had previously expanded have now retreated to their  original area and insurance line. As a result of this continuing change in the  composition of the medical malpractice insurance market, changes in  premium rates in the next soft market may be different from previous  markets, when commercial carriers dominated the market.
section_title: A Growing Number of Individual Hospitals and Hospital and Physician Groups Have Begun Self- Insuring
paragraphs: Over the past several years, an increasing number of individual hospitals  and consortia of hospitals and physicians have begun to self-insure in a  variety of ways.  Officials from the American Hospital Association  estimated that 40 percent of its member hospitals are now self-insured. In  states such as Florida that allow individual physicians to self-insure,  individual health care providers are also insuring themselves. Other  hospitals and groups of physicians are joining alternative risk-sharing  mechanisms, such as risk retention groups or trusts. Although some  hospitals and physicians have used these alternatives in the past, some  industry experts we spoke to said that the increasing movement to such  arrangements under the current market conditions indicates that some  health care providers are having difficulty obtaining insurance in the  traditional market.
While these arrangements could save money on the administrative costs of  insurance, they do not change the underlying costs of claims. Hospitals and  physicians insured through these arrangements often assume greater  financial responsibility for malpractice than they would under traditional  insurance arrangements and thus face a potentially greater risk of  insolvency. Although self-insured hospitals generally use excess loss  insurance for claims that exceed a certain amount, the hospitals must pay  the entire amount up to that threshold. Rather than a known number of  smaller payments on an insurance policy, the hospitals risk an unknown  number of potentially larger payments. And the threshold for excess loss  insurance is rising in a number of states. In Nevada, for example, some  hospitals’ excess loss insurance used to cover claim amounts in excess of  $1 million but now covers amounts above $2 million, leaving self-insured  hospitals with $1 million more exposure per claim. Self-insured physicians,  who have no other coverage for large losses, risk their personal assets with  every claim.
Hospitals and physicians are not the only ones more at risk under these  alternative arrangements. Claimants seeking compensation for their  injuries may have more difficulty obtaining payments from some of these  alternative entities and self-insured hospitals and physicians, for several  reasons. First, these entities and the self-insured are subject only to limited  public oversight, as state insurance departments do not regulate them.  Further, these entities do not participate in the state-run safety nets that  pay claims for insolvent insurance companies (state guaranty funds). Once  such a risk-sharing consortium fails, claimants may have no other recourse  but to try to enforce judgments against physicians personally. But enforcing  a judgment against a physician personally is generally more difficult than  obtaining payment under an insurance policy from a solvent insurance  company.
Data on these forms of insurance are sparse, so the extent to which  physicians and hospitals are using such arrangements is difficult to  measure. For example, NAIC and state insurance department data do not  include information on self-insurance or on most alternative risk-sharing  vehicles. In addition, one industry group has estimated that the information  available from A.M. Best, a recognized industry data source, accounts for  less than half the costs resulting from medical malpractice claims. Like  the growth of physician-owned insurance companies, however, the growth  of such forms of insurance since the previous soft market may affect the  extent to which premium rates change in the next soft market.
section_title: All States Have Passed Laws Designed to Reduce the Growth of Medical Malpractice Premium Rates
paragraphs: Since the medical malpractice crisis of the mid-1970s, all states have  enacted some change in their laws in order to reduce upward pressure on  medical malpractice premiums. Most of these changes are designed to  reduce insurers’ losses by limiting the number of claims filed, the size of  awards and settlements, and the time and costs associated with resolving  claims. Other changes are designed to help health care providers by more  directly controlling premium rates. Appendix II contains a more detailed  explanation of some of the types of legal changes that some states have  made, and appendix III contains more detail on the relevant laws in our  seven sample states.
Most of the state laws aimed at controlling premium rates attempt to  reduce insurer losses related to medical malpractice claims. Many of these  laws have similar provisions, the most controversial being the limitation, or  cap, on subjective, nonmonetary losses such as pain and suffering  (noneconomic damages). Several insurers and medical associations argue  that such a cap will help control losses on medical malpractice claims and  therefore moderate premium rate increases. But several trial lawyer and  consumer rights associations argue that such caps will limit consumers’  ability to collect appropriate compensation for their injuries and may not  reduce medical malpractice premium rates.
A cap on noneconomic damages may decrease insurers’ losses on claims by  limiting the overall amount paid out by insurance companies, especially  since noneconomic damages can be a substantial portion of losses on some  claims. Further, such a limit may also decrease the number of claims  brought against health care providers. Plaintiffs’ attorneys are usually paid  based on a percentage of what the claimant recovers, and according to  some trial attorneys we spoke with, attorneys may be less likely to  represent injured parties with minor economic damages if noneconomic  damages are limited.
Caps on noneconomic losses may have effects beyond reducing insurers’  costs. In theory, for example, after the frequency and severity of losses  have been reduced, insurers will decrease premium rates as well. Insurers  may also be better able to predict what they will have to pay out in  noneconomic damages because they can more easily estimate potential  losses, reducing the uncertainty that can give rise to premium rate  increases. Insurers reported that economic damages (generally medical  costs and lost wages), are more predictable than noneconomic damages,  which are generally meant to compensate for pain and suffering and thus  are very difficult to quantify.
In addition to attempting to decrease losses on medical malpractice claims,  two of our sample states have passed laws directly affecting premium rates  and insurance regulations. In a 1988 referendum, California passed  Proposition 103, which includes, among other things, a 20 percent rollback  of prices for all property-casualty insurers (including medical malpractice  insurers), a 1-year moratorium on premium rate increases, and a provision  granting consumers the right to challenge any commercial insurance rate  increases greater than 15 percent. In 1995, Texas passed legislation that  required many insurance carriers, including medical malpractice insurers,  to reduce rates to a level deemed by the Texas Department of Insurance to  be acceptable, allowing for a reasonable profit. Texas passed the legislation  in conjunction with changes to Texas’ tort system. The legislators wanted  to avoid creating a windfall for insurers and believed that the companies  would not lower premium rates on their own until the impact of the  changes to the tort system could be actuarially determined.
Interested parties debate the impact these various measures may have had  on premium rates. However, a lack of comprehensive data on losses at the  insurance company level makes measuring the precise impact of the  measures impossible. As noted earlier, in the vast majority of cases,  existing data do not categorize losses on claims as economic or  noneconomic, so it is not possible to quantify the impact of a cap on  noneconomic damages on insurers’ losses. Similarly, it is not possible to  show exactly how much a cap would affect claim frequency or claims- handling costs. In addition, while most claims are settled and caps apply  only to trial verdicts, some insurers and actuaries told us that limits on  damages would still have an indirect impact on settlements by limiting  potential damages should the claims go to trial. But given the limitations on  measuring the impact of caps on trial verdicts, an indirect impact would be  even more difficult to measure. Further, state laws differ dramatically, so  comparing their impact is difficult. For example, limitations on damages  can vary drastically in amount, type of damages covered, and how the  limitations apply. Some states have caps of $250,000 on noneconomic  damages, while other states have caps up to several times that amount.  Moreover, some dollar limits change over time—for instance, because they  are indexed to inflation—while others do not.  Some states apply the cap to  all damages, including economic damages, and some apply the cap “per  occurrence” of malpractice. That is, the total amount collected by all  parties injured by an act of medical malpractice cannot exceed the cap,  regardless of how many physicians, hospitals, or other health care  providers may be partially liable for the injuries. In contrast, for example,  Nevada’s recently passed limitations on damages allow multiple plaintiffs  to collect the full limit from any number of responsible defendants.
The filing and resolution of medical malpractice claims is regulated, to a  great extent, by states’ tort and insurance laws. Changes to such laws can  thus have a great effect on both the frequency and severity of those claims,  which in turn can affect premium rates. Because many states have made  changes to these laws, it is difficult to predict the extent to which premium  rates might change in future markets.
section_title: Conclusions
paragraphs: Multiple factors have combined to increase medical malpractice premium  rates over the past several years, but losses on medical malpractice claims  appear to be the primary driver of increased premium rates in the long  term. Such losses are by far the largest component of insurer costs, and in  the long run, premium rates are set at a level designed to cover anticipated  costs. However, the year-to-year increase in premium rates can vary  substantially because of perceived future losses and a variety of other  factors, including investment returns and reinsurance rates. Moreover, the  market for medical malpractice insurance is not national, but depends on  the varying framework of insurance, legal, and health care structures  within each of the states. As a result, both the extent and the effects of  changes in losses and other insurance-related factors on premium rates  also vary by state.
While losses aggregated for the industry as a whole have shown a relatively  consistent upward trend over time, the loss experience of any single  company is likely to vary from year to year and to increase more rapidly in  some years than in others. At the same time, because of the long lag  between collecting premium income and paying on claims, premium rates  for the next year must be high enough to cover claims that will be reported  that year, the majority of which will be paid over the next 3 to 5 years. And  due to the volatility of the ultimate payouts on medical malpractice claims,  it is difficult for insurers to predict the amount of those payouts with great  certainty. As a result, changes in current losses can have large effects on  perceived or estimated future losses and consequently on premium rates,  because if insurers underestimate what will be needed to pay claims, they  risk not only future profits but potentially their solvency.
However, factors other than losses--such as changes in investment income  or the competitive environment--can also affect premium rate decisions in  the short run. These factors can either amplify or reduce the effect of  losses on premium rates. For example, high expected returns on  investment may legitimately permit insurers to price insurance below the  expected cost of paying claims. But incorrect projections of continuing  high returns could cause insurers to continue to hold prices down for too  long, even though underlying losses may be rising.  When such factors  affect most or all medical malpractice insurers, the result appears as a  period of stable or falling premium rates or a period of sharply rising rates.  When they alternate, these periods may describe the soft and hard phases  of the medical malpractice insurance cycle.
Based on available data, as well as our discussions with insurance industry  participants, a variety of factors combined to explain the malpractice  insurance cycle that produced several years of relatively stable premium  rates in the 1990s followed by the severe premium rate increases of the past  few years. To begin with, insurer losses anticipated in the late 1980s did not  materialize as projected, so insurers went into the 1990s with reserves and  premium rates that proved to be higher than the actual losses they would  experience. At the same time, insurers began a decade of high investment  returns.  This emerging profitability encouraged insurers to expand their  market share, as both the downward adjustment of loss reserves and high  investment returns increased insurers’ income. As a result, insurers were  generally able to keep premium rates flat or even reduce them, although  the medical malpractice market as a whole continued to experience  modestly increasing underlying losses throughout the decade. Finally, by  the mid- to late 1990s, as excess reserves were exhausted and investment  income fell below expectations, insurers’ profitability declined. Regulators  found that some insurers were insolvent, with insufficient reserves and  capital to pay future claims. In 2001, one of the two largest medical  malpractice insurers, which sold insurance in almost every state,  determined that medical malpractice was a line of insurance that was too  unpredictable to be profitable over the long term. Alternatively, some  companies decided that, at a minimum, they needed to reduce their size  and consolidate their markets. These actions, taken together, reduced the  availability of medical malpractice insurance, at least in some states,  further exacerbating the insurance crisis. As a result of all of these factors,  insurers continuing to sell medical malpractice insurance requested and  received large rate increases in many states. It remains to be seen whether  these increases will, as occurred in the 1980s, be found to have exceeded  those necessary to pay for future claims losses, thus contributing to the  beginning of the next insurance cycle.
While this explanation accounts for observed events in the market for  medical malpractice insurance, it does not provide answers to other  important questions about the market for medical malpractice insurance,  including an explanation of the causes of rising losses over time. The data  currently collected do not permit many of the analyses that would provide  answers to these questions. This lack of data is due, in part, to the nature of  NAIC’s and states’ regulatory reporting requirements for all lines of  insurance, which focus primarily on the information needed to evaluate a  company’s solvency. Most insurance regulators do not collect the data that  would allow analyses of the severity and frequency of medical malpractice  claims for individual insurer operations within specific states. Moreover,  insurers are generally not required to submit to NAIC or state regulators  data that would show how insurers losses are divided between settlements  and trial verdicts or between economic and noneconomic damages. Finally,  the increasing use of insurance or self-insurance mechanisms that are not  subject to state or NAIC reporting requirements further complicates a  complete analysis. While more complete insurance data would help  provide better answers to questions about how the medical malpractice  insurance market is working, other data would be equally important for  analyzing the underlying causes of rising malpractice losses and associated  costs. These data relate to factors outside the insurance industry, such as  policies, practices, and outcomes in both the medical and legal arenas.
However, collecting and analyzing such data were beyond the scope of this  report.
section_title: Matter for Congressional Consideration
paragraphs: Health care providers have suffered through three medical malpractice  insurance “crises” in the past 30 years. Each instance has generated  competing claims about the extent of the problem, the causes, and the  possible solutions. In each instance, a lack of necessary data has hindered  and continues to hinder the efforts of Congress, state regulators, and others  to carefully analyze the problem and the effectiveness of the solutions that  have been tried. Because of the potential for future crises, and in order to  facilitate the evaluation of legislative remedies put in place by various  levels of government, Congress may want to consider taking steps to  ensure that additional and better data are collected. Specifically, Congress  may want to consider encouraging NAIC and state insurance regulators to  identify the types of data that are necessary to properly evaluate the  medical malpractice insurance market—specifically, the frequency,  severity, and causes of losses—and begin collecting these data in a form  that would allow appropriate analysis. Included in this process would be an  analysis of the costs and benefits of collecting such data, as well as the  extent to which some segments of this market are not captured by current  data-gathering efforts. Such data could serve the interests of state and  federal governments and allow both to better understand the causes of  recurring crises in the medical malpractice insurance market and formulate  the most appropriate and effective solutions.
section_title: NAIC Comments and Our Evaluation
paragraphs: NAIC’s Director of Research provided us with oral comments on a draft of  this report. The Director generally agreed with the report’s findings,  conclusions, and matter for congressional consideration. Specifically, the  Director agreed that the medical malpractice markets are not national in  nature and vary widely with regard to their insurance markets, regulatory  framework, legal environment, and health care structures. Furthermore,  the Director stated that the medical malpractice insurance industry has  shown an upward trend in losses over time and that this rise can be  attributed to a variety of causes that are difficult to measure or quantify.  The Director also said that he does not believe that excess profits by  insurers are in evidence.
The Director told us that NAIC is working on a study of the medical  malpractice marketplace that he hopes will be ready for distribution in the  summer of 2003. The Director stated that NAIC, like GAO, had identified  many data limitations that make the study of this line of insurance difficult.  As a result, the Director generally agreed with our matter for congressional  consideration that Congress consider encouraging NAIC and state  regulators to identify and collect additional information that could be used  to properly evaluate the medical malpractice insurance market. The  Director stated that while such efforts would require some additional  resources, the costs would not be prohibitive and the efforts would provide  needed information. The Director also provided technical comments,  which we have incorporated into the report as appropriate.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the Chairmen  of the Senate Committee on Governmental Affairs and its Subcommittee on  Oversight of Government Management, the Federal Workforce, and the  District of Columbia; the Chairman of the House Committee on the  Judiciary; and the Chairman of the House Committee on Energy and  Commerce. We will also send copies of this report to other interested  congressional committees and members, and we will make copies available  to others on request. In addition, the report will be available at no charge  on the GAO Web site at http://www.gao.gov.
If you or your staffs have any questions regarding this report, please  contact me or Lawrence Cluff at (202) 512-8678. Additional contributors  are acknowledged in appendix IV.
section_title: Scope and Methodology
paragraphs: Recognizing that the medical malpractice market can vary considerably  across states, we judgmentally selected a sample of seven states in order to  conduct a more in-depth review in each of those states. Except where  otherwise noted, our analyses were limited to these states. We selected our  sample so that we would have a mix of states based on the following  characteristics: extent of recent increases in premium rates, status as an  American Medical Association crisis state, presence of caps on  noneconomic damages, state population, and aggregate loss ratio for  medical malpractice insurers within the state. The states we selected were  California, Florida, Minnesota, Mississippi, Nevada, Pennsylvania, and  Texas. Within each state we spoke to one or both of the two largest and  currently active sellers of medical malpractice insurance, the state  insurance regulator, and the state association of trial attorneys. In six  states, we spoke to the state medical association, and in five states, we  spoke to the state hospital association. Due to time constraints, we did not  speak to the medical or hospital associations in Texas or the hospital  association in Florida. We used information obtained from these  organizations to help answer each of our objectives and, as outlined below,  also performed additional work for each objective.
To examine the extent of increases in medical malpractice insurance rates  for the largest insurers in our sample states, we reviewed annual survey  data on medical malpractice premium rates collected by a private data  collection company. While individual insurers determine whether to  respond to the survey, we believe the data to be representative for the three  medical specialties for which the company collects data—internal  medicine, general surgery, and obstetrics/gynecology—because of both the  number of insurers responding to the survey and the states represented by  them. The premium rates collected in the survey are base rates, which do  not reflect discounts or additional charges by insurers, so the actual  premium rates charged by insurers can vary from the premium rates  collected in the survey. We could not determine the extent to which the  actual premium rates charged varied from the base rates, but among the  insurers we spoke with, the actual premium rates charged in 2001 and 2002  ranged from about 50 to 100 percent of the base rates. We did not test the  reliability of the survey data.
To analyze the factors contributing to the premium rate increases in our  sample states and other states, we examined data from state insurance  regulators, the National Association of Insurance Commissioners (NAIC),  A.M. Best, the Securities and Exchange Commission, and the Physician  Insurers Association of America on insurers in our sample states as well as  the medical malpractice insurance market as a whole. We did not verify the  reliability of these data. Where possible, we obtained data from 1975 to the  present. As noted earlier in this report, comprehensive, reliable data that  would have allowed us to quantify the effect of individual factors on  medical malpractice premium rates did not exist. We also reviewed  relevant academic studies and industry guidance. In addition, we spoke  with officials from the insurers and state insurance departments in our  sample states, as well as professional actuarial and insurance  organizations. To analyze factors that were likely to vary among states— losses on medical malpractice claims, reinsurance rates, and competition  among insurers—we reviewed data for one or both of the two largest and  active medical malpractice insurers in our samples states. We also  reviewed aggregate data on losses for all insurers in each state as well as  the U.S. medical malpractice insurance market as a whole. To analyze  factors that were likely to be common among medical malpractice insurers  in all states—investment income and the presence of an insurance cycle— we reviewed either A.M Best data for the 15 largest medical malpractice  insurers as of 2001 (whose combined market share nationally was  approximately 64.3 percent), or NAIC data for all medical malpractice  insurers reporting data to NAIC. Also as noted earlier in this report, data  and scope limitations prevented us from fully analyzing the factors behind  increased losses from medical malpractice claims.
To analyze how the national medical malpractice insurance market has  changed since previous periods of rising premium rates, we reviewed  studies published by NAIC; analyzed insurance industry data compiled by  NAIC and A.M. Best; reviewed tort laws across all states and state  insurance regulations; spoke with insurers and state insurance regulators  in our sample states; and spoke with officials from national professional  actuarial, insurance, legal, consumer rights, medical, and hospital  organizations.
We conducted our work from July 2002 through June 2003 in accordance  with generally accepted government auditing standards.
section_title: Legal Summary
paragraphs: Each state’s tort laws generally govern the way in which medical  malpractice claims or lawsuits are resolved. As discussed in this report,  most state laws aimed at controlling premium rates attempt to reduce  insurer losses related to medical malpractice claims. Although these laws  take many different forms, they usually have at least some of the provisions  summarized in this appendix. State courts have dealt differently with these  kinds of provisions, and some states have found that some of these kinds of  provisions are unconstitutional. The provisions summarized in this  appendix are not the only ones that might impact the treatment of medical  malpractice claims in states’ tort systems.
Limits on Damages. Damages in medical malpractice cases usually consist  of two categories, economic damages and noneconomic damages.  (Although punitive damages can be available in cases of gross negligence  and outrageous conduct of the health care provider, juries rarely award  punitive damages in medical malpractice cases.)  Economic damages  generally consist of past and future monetary damages, such as lost wages  or medical expenses. Noneconomic damages generally consist of past and  future subjective, non-monetary loss, including pain, suffering, marital  losses, and anguish. Although some states have limits on the total amount  of damages recoverable in a medical malpractice suit, most states with  limits, as well as pending federal legislation, have emphasized a limit only  on noneconomic damages. As discussed in this report, limitations on  damages can vary drastically in amount, type of damages covered, and  application.
As mentioned in this report, limitations on damages can impact frequency  of lawsuits as well. Plaintiffs’ attorneys are usually paid based on a  percentage of what the claimant recovers, and according to some trial  attorneys we spoke to, attorneys may be less likely to represent an injured  party with minor economic damages if noneconomic damages are limited.  One consumer rights group told us that suits with limited economic  damages are typical in cases where the plaintiff is not working and does not  have substantial costs of future medical care.
Evidence of Collateral Source Payments. At common law, or without any  legislative intervention, a plaintiff would be able to recover all damages  sustained from a liable defendant, even if the plaintiff were going to receive  money from other sources, called “collateral sources,” like health  insurance policies or Social Security. Some states have modified this  common law rule with statutes that allow defendants to show that the  claimant is going to receive funds from collateral sources that will  compensate the claimant for damages he or she is attempting to collect  from the defendant. These statutes authorize, to various extents,  decreasing the defendant’s liability by the amount the claimant will receive  from other sources. In the state summaries in appendix III, if a state has not  modified the common law rule regarding collateral sources, the chart will  say “no modification.”
Joint and Several Liability. Joint and several liability is the common law  rule that a plaintiff can collect the entire judgment from any liable  defendant, regardless of how much of the harm that defendant’s actions  caused. Some states have eliminated joint and several liability, making each  defendant responsible for only the amount or share of damage he or she  caused the plaintiff. Other states have eliminated joint and several liability  only for noneconomic damages. Some states have eliminated joint and  several liability for defendants responsible for less than a specified  percentage of the plaintiff’s harm; for example, if a defendant is less than 50  percent responsible, that defendant might need to pay only for that  percentage of the plaintiff’s damages.
Attorney Contingency Fees. Most plaintiff attorneys are paid on a  contingency fee basis. A contingency fee is one in which the lawyer, instead  of charging an hourly fee for services, agrees to accept a percentage of the  recovery if the plaintiff wins or settles. Some states have laws that limit  attorney contingency fees. For example, in California a plaintiff’s attorney  can collect up to 40 percent of the first $50,000 recovered, 33 percent of the  next $50,000 recovered, 25 percent of the next $500,000 recovered, and 15  percent of any amount exceeding $600,000. Provisions that decrease  attorneys’ financial incentives to accept cases could decrease the number  of attorneys willing to take the cases. These limits were based on the belief  that they would lead to more selective screening by plaintiffs’ attorneys to  ensure that the claims filed had merit. In the state summaries in appendix  III, if a state does not have limits in place specifically for attorneys in  medical malpractice cases, the chart will say “no modification.”
Statute of Limitations. The amount of time a plaintiff has to file a claim is  known as the “statute of limitations.”  Some states have reduced their  statutes of limitations on medical malpractice claims. This decrease could  limit the number of cases filed by claimants. Special time requirements for  minors are not noted on the summaries in appendix III.
Periodic Payment of Damages. Defendants traditionally pay damages in a  lump sum, even if they are being collected for future time periods, such as  future medical care or future lost wages. However, some states allow or  require certain damages to be paid over time, such as over the life of the  injured party or period of disability, either through the purchase of an  annuity or through self-funding by institutional defendants. Some insurers  we spoke with said that purchasing annuities can reduce insurers’ costs,  and that periodic payments better match damage payments to future  medical costs and lost earnings incurred by injured parties, assuring that  money will be available to the injured party in the future. A consumer rights  group we spoke with told us that, because periodic payments stop at the  death of  an injured party, there may be unsatisfied medical bills at the time  of the injured party’s death.
Expert Certification. Many states require that medical experts certify in  one way or another the validity of the claimant’s case. These statutes are  designed in part to keep cases without merit, also known as frivolous  cases, out of court. Expert certification requirements also have the  potential to get as many relevant facts out in the open as early as possible,  so that settlement discussions are fruitful and it becomes unnecessary to  take as many cases to trial, thus decreasing the claims-handling costs of the  case.
Arbitration. Some states have enacted arbitration statutes that address  medical malpractice claims specifically. Some of these statutes require that  the arbitration agreement meets standards that are designed to alert the  patient to the fact that he is waiving a jury trial through the use of a specific  size of font, or by specifying the precise wording that must be contained in  the agreement. Although most courts have held that medical malpractice  claims can properly be submitted to arbitration, litigation involving the  arbitration statutes has involved issues such as whether the patient knew  he was waiving the right to a jury trial, whether the patient who agrees to  arbitration had appropriate bargaining strength, and whether third parties  have authority to bind others to arbitration.
By providing an option for arbitration, parties can avoid the larger expense  of taking claims to court. However, some industry experts said that these  arbitration provisions may not be binding and may result in the losing party  deciding to take the case to court in any event, so arbitration can simply  increase expenses without affecting the ultimate resolution of the dispute.
Advanced Notice of Claim. Advanced-notice-of-claim provisions require  claimants to give defendants some period of time, 90 days for example,  prior to filing suit in court. Some insurers and plaintiffs’ attorneys we spoke  with said that this requirement aids plaintiffs and defendants in resolving  meritorious claims outside of the court system and allows plaintiffs’  attorneys to obtain relevant records to determine whether a case has merit.  However, another group we spoke to said that the advanced notice of claim  provision in that group’s state was ineffective.
Bad Faith Claims. As mentioned in this report, some insurers we spoke  with told us that they can be liable for amounts beyond an insurance  policy’s limits, if the policyholder requests the insurer to settle with the  plaintiff for an amount equal to or less than the policy limit, and the insurer  takes the case to trial, loses, and a judgment is entered in an amount  greater than the policy limits. Industry experts we spoke to said that, under  those circumstances, the insurer could be liable for acting in “bad faith.”  In  some states, like Nevada, this bad faith claim can be brought only by the  insured physician; that is, the physician can seek payment from the  insurance company if the physician has paid a plaintiff beyond a policy’s  limits. In contrast, in Florida, the plaintiff can sue a physician’s insurer  directly for the insurer’s alleged improper conduct in medical malpractice  cases. The difficulty of establishing that an insurer acted in bad faith varies  according to state law. Insurers in three of our study states—Texas,  California, and Florida—said that bad faith litigation was a substantial  issue in their states.
section_title: State Summaries
paragraphs: This appendix describes the specific medical malpractice insurance  environment in each the seven sample states we evaluated for this report.    (See figs.10-16.)
subsections: section_title: Market Description
paragraphs: Typical Coverage Type and Limit. This section summarizes the type of  medical malpractice insurance coverage typically issued in the state, as  well as the standard coverage limits of these policies. Coverage limits  can range from $100,000/$300,000 to up to $2 million /$6 million. The  lower number is the amount the insurer will pay per claim and the  higher number is the total the insurer will pay in aggregate for all claims  during a policy period. There are several types of insurance coverage  available.
Occurrence-based insurance provides coverage for claims that arise  from incidents that occur during the time the insurance policy is in  force, even if the policy is not continued. Claims that arise from  incidents occurring during the policy period that are reported after  the policy’s cancellation date are still covered in the future.
Claims-made insurance provides coverage for claims that arise from  incidents that occur and are reported during the time the insurance  policy is in force.
Prior acts coverage is a supplement to a claims-made policy that can  be purchased from a new carrier when changing carriers. Prior acts  coverage covers incidents that occurred prior to the switch to a new  carrier but had not been previously reported.
Tail coverage is an option available from a former carrier to continue  coverage for those dates that the claims-made coverage was in effect.
Regional Differences. This section notes any major regional differences  in premium rates quoted by insurers within the state using the base rate  for general surgery as a comparison. The Medical Liability Monitor  annually surveys providers of medical malpractice insurance to obtain  their premium base rates for three specialties:  internal medicine,  obstetrics/gynecology, and general surgery. In the state summaries,  descriptions of regional differences in premium rates are based on  Medical Liability Monitor information.
Frequency and Severity. This section describes the extent to which  insurers and state regulators we spoke with believe frequency and  severity are changing in each state. Frequency is usually defined as the  number of claims per number of doctors, counting doctors in different  specialties as more or fewer doctors depending on the risk associated  with the specialty.  Severity is the average loss to the insurer per claim.
section_title: Insurer Characteristics and Market Share
paragraphs: Insurer Characteristics. This section describes the various types of  insurers present in each of the states. In addition to traditional  commercial insurance companies, the following entities or  arrangements can provide liability protection:  Physician insurer associations or physician mutuals are physician  owned and operated insurance companies that provide medical  liability insurance.
Reciprocals are similar to mutuals, except that an attorney-in-fact  often manages the reciprocal.
Risk retention groups are insurance companies owned by  policyholders. Risk retention groups are organized under federal  law—the Liability Risk Retention Act of 1986.
Trusts are a form of self-insurance and consist of segregated  accounts of health care entities that estimate liabilities and set aside  funds to cover them.
Market Share. This section describes the medical malpractice market in  each of the states. Recent changes in the market are also noted in this  section.
Joint Underwriting Association (JUA). This section details whether a  state has created a JUA and the extent of its use. A JUA is a state- sponsored association of insurance companies formed with statutory  approval from the state for the express purpose of providing certain  insurance to the public.
section_title: Rate Regulation
paragraphs: This section describes the regulatory scheme employed by each state.  Statutory requirements generally provide that insurance rates be adequate,  not excessive, and not unfairly discriminatory. The degree of regulation of  medical malpractice insurance rates varies from state to state. States may  have “prior approval” requirements in which all rates must be filed with the  insurance department before use and must be either approved or  disapproved by the department of insurance. Other states have “file and  use” provisions in which the insurers must file their rates with the state’s  insurance department; however, the rates may be used without the  department’s prior approval.
section_title: State Tort Laws
paragraphs: This section identifies key components of each state’s efforts to address the  medical malpractice insurance situation by targeting ways in which  medical malpractice claims are processed through the court system. The  following legal provisions are summarized for each state: Appendix II has a description of each of these provisions, in addition to  other provisions that are not summarized herein, but that might impact  medical malpractice claims. For the information on state provisions in  appendix III, we relied upon a summary of state tort laws compiled by the  National Conference of State Legislatures (NCSL) in October of 2002. We  independently reviewed selected sections of the NCSL summary for  accuracy, and supplemented the NCSL information with information from  interviews with industry officials. The state laws summarized herein might  have changed since the date of the NCSL publication. Additionally, as noted  in appendix II, the state tort laws summarized in this appendix are not the  only ones that might impact the treatment of medical malpractice claims in  states’ tort systems.
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to those individuals named above, Patrick Ward, Melvin  Thomas, Andrew Nelson, Heather Holsinger, Rudy Chatlos, Raymond  Wessmiller, Rachel DeMarcus, and Emily Chalmers made key contributions  to this report.
section_title: Related GAO Products
paragraphs: Medical Malpractice: Effects of Varying Laws in the District of Columbia,  Maryland, and Virginia.  GAO/HEHS-00-5.  Washington, D.C.: October 15,  1999.
Medical Malpractice: Federal Tort Claims Act Coverage Could Reduce  Health Centers' Costs.  GAO/HEHS-97-57.  Washington, D.C.: April 14, 1997.
Medical Liability: Impact on Hospital and Physician Costs Extends  Beyond Insurance.  GAO/AIMD-95-169.  Washington, D.C.: September 29,  1995.
Medical Malpractice Insurance Options.  GAO/HEHS-94-105R.   Washington, D.C.: February 28, 1994.
Medical Malpractice: Maine's Use of Practice Guidelines to Reduce Costs.   GAO/HRD-94-8.  Washington, D.C.: October 25, 1993.
Medical Malpractice: Estimated Savings and Costs of Federal Insurance  at Health Centers. GAO/HRD-93-130.  Washington, D.C.: September 24,  1993.
Medical Malpractice: Medicare/Medicaid Beneficiaries Account for a  Relatively Small Percentage of Malpractice Losses.  GAO/HRD-93-126.   Washington, D.C.: August 11, 1993.
Medical Malpractice: Experience with Efforts to Address Problems.   GAO/T-HRD-93-24.  Washington, D.C.: May 20, 1993.
Practitioner Data Bank: Information on Small Medical Malpractice  Payments.  GAO/IMTEC-92-56.  Washington, D.C.: July 7, 1992.
Medical Malpractice: Alternatives to Litigation.  GAO/HRD-92-28.   Washington, D.C.: January 10, 1992.
Medical Malpractice: Data on Claims Needed to Evaluate Health Centers'  Insurance Alternatives.  GAO/HRD-91-98.  Washington, D.C.: May 2, 1991.
Medical Malpractice: A Continuing Problem With Far-Reaching  Implications.  GAO/T-HRD-90-24.  Washington, D.C.: April 26, 1990.
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