Medical liability costs on the rise

Medical liability insurance premiums are increasing after a decade of mostly steady rates, according to a new analysis from the American Medical Association. In 2020, more than 30% of premiums reported on a survey of liability insurers increased from the previous year, the highest percentage since 2005.

For a second consecutive year there has been an exceptional surge in the size of the increase. Between 2010 and 2018, the share of premiums that increased ranged from 12% to 17%. In 2019, that proportion almost doubled to 26.5% and went up again in 2020 to 31.1%.

According to the AMA analysis, although some 2020 premiums may have been set after the onset of the COVID-19 pandemic, it was still too early for them to be affected by it.

“Increases in medical liability premiums compound the economic stress on medical practices as the COVID-19 pandemic resulted in significant reductions to patient volume and revenue, and higher expenses for scarce medical supplies,” said AMA President Susan R. Bailey, MD, in a release. “Practice revenue has not fully recovered as the pandemic has stretched on and a protracted upward trend in medical liability premiums will threaten the viability of many practices that already face a difficult road to recovery.”

The analysis identified the 14 states that had premium increases of 10% or more. Those states and their shares of reported premiums that increased by such magnitude in 2020 are: Kentucky (29.6%), South Carolina (27.8%), Maryland (18.8%), Nebraska (16.7%), Oregon (16.7%), Montana (16.7%), Georgia (14.8%), Missouri (14.8%), New Hampshire (13.3%), Illinois (11.9%), Michigan (11.6%), Texas (9.2%), North Carolina (6.7%), and Virginia (1.3%).

The AMA report also finds striking differences in premiums by geography. For example, in 2020, some physicians in OB/GYN faced base premiums ranging from $49,804 in Los Angeles County, California, to $205,380 in Miami-Dade County, Florida.

“Keeping medical liability premium growth in-check is imperative to ensure patient access to care is not jeopardized by unaffordable liability insurance costs that make it impossible for physicians to remain in practice,” said Bailey. “This concern is particularly pressing given the negative impact that the COVID-19 pandemic has had on access and practice viability, as many physicians have had to suspend patient visits or elective procedures, and some have had to close their practices.”

Together with state medical societies, the AMA is pursuing both traditional and innovative medical liability reforms to preserve premium stability and meet the needs of millions of Americans who need affordable, accessible medical care. This includes limited and targeted emergency protections for physicians who continue to treat patients during the pandemic without adequate resources and support.

The newly released AMA analysis on medical liability insurance premiums is based on an annual survey of professional liability insurers conducted by the Medical Liability Monitor. The MLM reports base premiums for three specialties in each state where the responding insurers provide coverage.