Personal Injury Law

How Did He Do? Insurance and Tort Reform (Part 2)

By Jane Akre

IB News - How Did He Do?- (Part 1)

Insurance Not Hurt

Mr. Obama said he had "no interest in putting insurance companies out of business," yet noted that profits often trump people.

'My guiding principle is, and always has been, that consumers do better when there is choice and competition. Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company. Without competition, the price of insurance goes up and the quality goes down. And it makes it easier for insurance companies to treat their customers badly — by cherry-picking the healthiest individuals and trying to drop the sickest; by overcharging small businesses who have no leverage; and by jacking up rates.'

But if the stock market is any indication, insurers and their stakeholders are not worried. Instead of a major shakeup of a public option that insurers have claims would lead to their bankruptcy, health insurers shares climbed Thursday.

Reuters reports that UnitedHealth Group and WellPoint, the two largest health insurers, were little changed in morning trading. Aetna Inc was up about 1 percent and Cigna Corp rose more than 3 percent.

Wells Fargo analyst Matt Perry said in a research note. "Overall we view the speech as neutral to insurers."

Karen Ignani, President of the America's Health Insurance Plans, the lobbying arm of the industry said insurers 'agree the status quo is not sustainable' and support reforms such as eliminating exclusions based on pre-existing conditions and prohibiting insurers from basing premiums on a person's health status or gender.

To make this possible, everyone needs to be required to have insurance to spread the risk, said Ignani.

Defensive Medicine

President Obama announced that demonstration projects in individual states could test ways to reform the medical liability system so doctors don't have to practice defensive medicine, presumably raising the cost of health care.

The American Medical Association's president was pleased Mr. Obama included medical malpractice freeform, reports the Business Journals.

'We cannot ignore this problem if health system reform is going to address the growing cost of care,' said Dr. J. James Rohack, president of the AMA.

But reducing accountability will not improve health care according to American Association for Justice (AAJ) President Anthony Tarricone. 'The focus must be on reducing medical errors and improving patient safety.'

Estimates are that more than 98,000 Americans are killed every year by preventable medical errors. A recent investigative report, 'Death By Mistake,' by the Hearst media group finds medical mistakes and hospital infections are blamed for 200,000 deaths a year.

Public Citizen, the consumer advocacy group, reports that about five percent of doctors are responsible for half of the medical malpractice in the U.S. that can result in permanent injury or death, and without discipline become repeat offenders.

Not being able to make these doctors accountable will only hurt patients who are severely injured says Joanne Doroshow, Executive Director of the Center for Justice & Democracy.

'Proposals that end up shielding unsafe hospitals or grossly negligent doctors from accountability by intruding upon the legal system are terrible public policy. Medical errors are at epidemic levels and this proposal will not only fail to fully compensate catastrophically injured patients, but also will undermine restraints the civil justice system currently imposes on dangerous misconduct.'

More errors will be allowed to occur, she says, increasing cost, not reducing it. Without accountability through the courts, Doroshow says the cost of medical errors will be shifted from perpetrators to state Medicaid systems, hard-pressed to pay them.

Tort Reform, Lone Star Style

In her 2004 investigative report on tort reform in Texas, 'Tort Reform, Lone Star Style,' journalist, Stephanie Mencimer uncovered that restricting legal penalties against wrongful corporate behavior was a disaster for consumers, workers and small business owners.

AP has provided the text of the president's speech in case you missed it. #

Full post as published by InjuryBoard on September 10, 2009 (boomark / email).