Are big price increases for malpractice coverage unprecedented?
This is the third time controversy over medical malpractice insurance has peaked in three decades. In the 1970s, federal wage-and-price controls limited how much insurers could raise rates. At the same time, inflation was high and the stock market was troubled. Carriers cut back on policy-writing or abandoned the market. As commercial insurers fled, doctors and hospitals teamed up to form their own insurance firms. Such provider-owned “mutuals” now control 60% of the medical malpractice market. In the mid-’80s, a mix of high interest rates and steep inflation pushed insurers to raise rates an average of 20% a year. Rates flattened and declined in the ’90s. Insurers are feeling less pain now “in proportion to what happened in the 1970s and mid-1980s,” says Hurley at Tillinghast-Towers Perrin. But, he says, doctors are being pinched harder. The biggest problem for doctors is that the health care market has changed since the 1980s, making it much more difficult to pass higher insurance co
