Malpractice Rates: How high now?

Premium hikes of 25 percent or more are now common, with more double-digit increases expected for 2004.

Malpractice premiums continued their dramatic rise last year, with no relief in sight for 2004. Rates in many states jumped more than 25 percent in 2003, and most carriers expect double-digit increases again this year. Even in states that showed no increase for 2003, many carriers have rate increases approved or pending for 2004, according to the latest survey conducted by Medical Liability Monitor, a newsletter that covers the malpractice insurance industry.

Not surprisingly, doctors in some of the biggest cities pay the highest premiums, with those practicing in the Miami area coping with the worst prices. Top rates for coverage there run more than $65,000 for internists, $227,000 for general surgeons, and nearly $250,000 for ob/gyns. Elsewhere, internists are paying as much as $50,000 in Detroit, $41,000 in Chicago (up 30 percent), $34,000 in Houston, and nearly $30,000 in Philadelphia (also up about 30 percent).

There are still some relative bargains for physicians in certain states. For example, internists in Idaho, Minnesota, Nebraska, and South Dakota could still find coverage in 2003 for less than $4,000. Ob/gyns in those states could buy policies for less than $20,000. And general surgeons in Minnesota, Nebraska, and South Dakota were able to get coverage for less than $10,000. In some states, rates varied widely across regions. In New York, for example, internists practicing in Nassau and Suffolk Counties on Long Island paid as much as $23,000, while their colleagues upstate paid as little as $6,548.

Even in states with relatively modest premiums (like Connecticut, Missouri, New Jersey, New Mexico, and Tennessee) some insurers hiked rates for internists more than 50 percent. In the Virginia suburbs surrounding Washington, DC, one carrier raised rates for internists nearly 140 percent.

(The MLM survey didn't cover rates for family physicians, but their premiums are typically close to those for internists. In the Medical Economics Continuing Survey for 2003, based on 2002 data, the median premiums were $9,000 for FPs vs $10,000 for internists. Similar differentials have existed over time.)

Not only are doctors paying higher rates, many are getting less coverage for their money, or having trouble finding any coverage at all. In response, some physicians are changing the way they practice in order to obtain affordable policies: Ob/gyns are giving up obstetrics, and surgeons are cutting back on office-based surgery.

Faced with increased claims frequency and higher payouts, some companies are tightening eligibility requirements, eliminating discounts and dividends, restricting coverage, dropping physicians who have spotty records, or simply withdrawing entirely from certain states. According to the MLM survey, insurers don't expect current efforts at tort reform to halt the increase in premiums in the short term. Even in Florida and Texas, which have passed tort reform legislation, carriers expect rates to continue to climb.