Do Malpractice Caps Lower Malpractice Premiums

Honestly, I have always figured they did. My thinking was that it is basic economics. Decrease the upside risk and premiums will come down.

Now, I’m not so sure. Certainly, at a glance, a cap on noneconomic damages appears to be correlated with keeping health care malpractice premiums down. But the data just does not back that up. Take a look at the analysis in Ferdon v. Wisconsin Patients Comp. Fund 701 N.W.2d 440 (Wis. 2005) where the court breaks down the “caps equal higher premiums” argument.

Even more to the macro picture is whether a cap decreases medical costs. That is the endgame, right? Malpractice caps can’t be about just lining the pockets of our highest paid professionals. (How would that look on a bumper sticker?)

The Ferdon court concluded that even if you assume a “cap affects medical malpractice insurance premiums,” it is clear that malpractice “premiums are an exceedingly small portion of overall health care costs.” Accordingly, the court concluded that caps in medical malpractice cases would have no effect on a patient’s – or the nation’s – health care costs.

From this, the court concluded that there as no objective basis to conclude that the $ 350,000 cap justifies the injustice of placing a cap on a jury’s award to malpractice victims who are disproportionately our very young and very old.

I have not ranted about medical malpractice caps in a while. Feels good.