Health insurance companies have been very adept at convincing consumers and doctors that insurance premiums continue to rise because of the number of medical malpractice lawsuits. Their argument leads to the conclusion that insurance premiums will stabilize or fall if medical malpractice lawsuits are restricted or prohibited. That’s a neat argument that’s worked as a public relations ploy. However, the facts don’t support the conclusion.
Let’s take a look at personal health insurance premiums. In the first nine months of 2010, insurance companies made a substantial profit of $9.3 billion collectively. That’s a 41% increase in profits from the previous year. So, why do premiums continue to rise?
Let’s now look at malpractice premiums. According to the American Association for Justice, medical malpractice insurance companies’ profits are higher than 99% of Fortune 500 companies.
The AAJ findings conclude that, “Malpractice insurers have seen their profit margins range from 5.9 percent to 74.8 percent, with an average of 31.2 percent. The report also finds that malpractice insurers have publicly overestimated their losses and underestimated their profits in an attempt to suggest the insurance business and medical practice in general faces a crisis that must be resolved by so-called “tort reform” — i.e., making it harder for patients to sue and to collect damages for their injuries.”
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