Some legislators and spokespersons for tort reform have claimed that medical malpractice payouts for medical negligence have been the cause of a rise in health insurance premiums. Advocates for medical malpractice reform continue to spread word of the alleged relationship between the two. Such rumors tended to turn the public against the medical malpractice plaintiffs. These plaintiffs, who suffer serious and lasting injuries as a result of medical negligence, have fallen out of favor in the eyes of juries who have been poisoned by the misleading information that these plaintiffs are the cause of high health insurance costs.
However, the claim of the relationship between the two is not only unsubstantiated, but empirical data shows that no such relationship exists.
Studies conducted by the University of Texas, Columbia University, and the University of Illinois show that hikes in health insurance premiums reflect market dynamics, and not medical malpractice payouts. Illustrating the unrelated relationship between payouts and premiums, statistics show that even when medical malpractice payouts continue decline, health insurance costs continue to rise.
The National Board of Economic Research came to similar conclusions. Its research showed that medical malpractice payouts were not the cause of increased rates. Rather, researchers found the rise in rates was closely related to the economic cycle of the insurance industry, powered by a decline in interest rates and investments. The research showed such interest rates and decline in investment income were the sole cause of the rise in health insurance costs, not medical malpractice litigation.
The unsubstantiated and unsupported claims by those advocating tort reform for medical malpractice suits has sparked fear in the public that compensating truly damaged plaintiffs will in turn negatively affect the public, as well as individual members of society. In the meantime, insurance companies have shown a massive increase in profits. During these times, the largest U.S. medical malpractice insurers have averaged reported profits higher than 99 percent of Fortune 500 companies. While these insurance companies thrive, people seriously and permanently harmed by medical negligence struggle to receive deserved compensation.
Ultimately, the fears that have been injected into our society regarding a distinct and close relationship between medical malpractice payouts and insurance premiums are incorrect and unsupported. On the other hand, according to true empirical data, the rise in insurance premiums instead reflect the market economy, wholly unrelated to medical malpractice litigation.