Submitted by Insurance Guy, May 6, 2008 15:02

I work in the reinsurance field, and I do pricing analysis on hospitals and physicians groups for excess and umbrella insurance. Insurers are required by state insurance regulators to maintain adequate surplus in order to make indemnity payments for lawsuits that have not been settled or even filed! States vary in their statute of limitations but generally speaking, the clock does not start ticking until a reasonable person would have detected the malpractice (for children, the clock starts ticking at the age of 18). Surpluses (some people may call it profits) eventually get paid out in indemnity payments. There is also the occasional very large loss. I think any OB/GYN could tell you about a $3M settlement of a colleague because, unfortunately, there was a bad outcome in a birthing procedure. Delay of treatment is fairly common in these cases. The same happens in most areas of medical malpractice: we patients have very high expectations. When those expectations are not met, we seek financial compensation. Yes, a real personal tragedy has occurred, but it is a general societal question about the method to compensate people when a personal tragedy occurs. When physicians form mutual companies, which are owned by the member physicians, so that there is nobody to "get rich" from the insurance premium collected, the mutuals fair pretty poorly. The bottom line is someone has to pay in our current tort system. Doctors in private practice have the option of going bare, but the financial risk is just too large. One would probably not opt to go without homeowners insurance because of the possible huge economic loss in , say, a fire, severe storm.

I do not have any answers but I do have several suggestions. (1) Place caps on non-economic damages; (2) create a system similar to the workers comp system, with defined benefits; (3) in non-emergency procedures, educate patients on the possible adverse outcomes and have patients sign off before performing a procedure; (4) be very selective in who you choose as a patient.

Many of us patients make little effort to maintain good health on our own (as an example, look at the obesity epidemic, and the diabetes epidemic). We patients expect the doctors to cure us of our maladies, when often that is not possible.

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