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Lifting the cap won’t drive our physicians out of NM

This is in response to (a July 14 op-ed ) “Health Care has Evolved, Malpractice Coverage Hasn’t” by (former N.M. Superintendent of Insurance) Don Letherer. (A new op-ed by Letherer is here).

In this op-ed, he writes the N.M. Medical Malpractice Act of 1976 “is now threatened by a district court ruling that the cap is unconstitutional.” He claims that should this cap be removed, “New Mexico will most certainly lose health care providers.” This is untrue.

While New Mexico may lose its dangerous doctors if there is no cap on what they have to pay the people they hurt, we can rework the MedMal Act to attract good doctors and make coverage cheaper.

I have been in insurance/consumer protection work for 60 years. I am an actuary. I am currently the director of insurance for the Consumer Federation of America. I was commissioner of insurance for the state of Texas. I testified before the state Legislature in 1986 and showed them that no further legal system changes were needed. I testified also in the 2018 case that led to the finding that New Mexico’s cap is unconstitutional.

Medical Malpractice insurance is profitable in New Mexico. I conducted a full study of N.M.’s medical malpractice insurance data and found the overall percentage of direct premiums paid out in claims was a profitable 65.9% over the 1975 to 2015 period. Over the past decade, the ratio remained at 60%, even including money in reserves, that is, not yet paid out in claims.

I served as the nation’s federal insurance administrator at the U.S. Department of Housing and Urban Development under a Republican president. In the mid 1970s, the White House, under pressure from doctors and hospitals to enact national tort reform, formed an inter-agency working group to examine whether the insurance industry’s claimed “explosion” of medical malpractice claims was causing the huge and sudden jump in premiums that doctors were experiencing. I was a member of that working group. We did a study revealing there was no “explosion” of claims and no justification for insurers drastically raising rates on doctors. We reported back to the White House that the problem was attributable to insurer economics and negotiated with the NAIC to create a new medical malpractice line of data in the annual statement insurers must file to enable the states and other researchers to monitor the situation over time. Because of our research, the White House did not support so-called “national tort reform” legislation at that time.

Unfortunately, at the state level in the 1970s, legislators, doctors, hospitals and others were fooled by the insurance companies into blaming lawyers and malpractice victims for the crisis the insurers themselves created. New Mexico was one of many states fooled into action by the insurance companies. Many states, like Arizona, Florida and, now, New Mexico, have found their caps unconstitutional.

The med/mal insurance market in New Mexico has been profitable even though many physicians doing business in New Mexico today chose to do so with no cap at all protecting them. These “un-capped” doctors do not leave the state. In the majority of states in America, there is no cap, and the medical malpractice markets are stable and doctors do not leave those states either. Letherer’s concerns about losing doctors if the cap is removed is simply not valid.

The current Medical Malpractice Act creates a “patient compensation fund” administered by the state that provides coverage over $200,000, and that coverage is cheap. Current insurance coverage with million-dollar “claims made” coverage is significantly cheaper than current MMA coverage. If the patient compensation fund were to continue to exist to provide cheap excess coverage for patients killed or catastrophically injured by malpractice, doctors are covered and patients are covered. It would actually result in cheaper malpractice insurance for doctors. That would attract doctors to New Mexico.

New Mexico’s patients deserve to be respected and fully compensated if seriously injured or killed by malpractice. The current Medical Malpractice Act serves only one thing: the insurance industry’s bottom line.

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