More on malpractice in America…
After posting this I received the following email from Steve posing some interesting questions:
Total payouts, even adjusting for inflation, look like they have indeed risen by about 38% in 10 years ($5.05b from $3.66b). But did they use the inflation rate for the whole economy or just the health care sector (which is typically higher than for the overall economy)? Since presumably a big chunk of the malpractice payouts are for the health care costs associated with those cases, I would argue that they should use the inflation rate for the health care sector.
Second, does anybody know what percent of the total awards are for “pain and suffering?” With that information, we could see whether payouts for damages are driving the increase in total awards.
Third, is the crisis already abating? Annualizing the 9-month figure suggests that total payouts for 2002 will be about $4.71b ($3.53b/.75), down from the $5.05b of 2001. Don’t know if the 2002 number is adjusted for inflation.
Fourth, part of the reason insurers are being squeezed is that their investment return rate dropped 11%! If my return rate dropped that much I’d be losing money on my investments (oh wait, I am but that’s another story). Has anyone calculated what that means in absolute dollars? One would think it’s had a big effect on what insurers need to charge.
Anyway, if I had time to do research, those are the questions I’d be looking into.
Thanks for a great blog site, enjoy reading it daily.