Tort reform would be a start so doctors didn’t have to pay so much for insurance.

Meanwhile, in the real world:

Despite the claims about ridiculous malpractice suits and awards, total costs from this source represent only 5% of the increases in health care cost in the U.S. and have remained so for many years. Of that 5%, one half of the amount is devoted to risk management consultation and training to reduce liability. There should be a calculated and estimated savings accrued by this focus that is then subtracted from actual malpractice settlement contribution to total health care costs. A law allowing Texas practitioners to sue managed care firms for interfering with medical decisions was violently opposed by the industry on the grounds that it would surely lead to all kinds of suits that would drive up costs. There were only two suits. The predicted deluge never happened— nor did the sky fall.

It is asserted by tort reformers that states with few regulations have the highest premiums. However, passage of such reforms do not lead to the promised premium reductions. Nevada, which saw premiums increase by 30% in one year, passed an award cap. Within weeks of the law’s enactment, the two major carriers in the state announced that they would not reduce rates for at least another year or two, and doctors are still waiting. Mississippi doctors had similar experiences. When Ohio’s cap on compensation awards for patients injured by malpractice was passed in January of 2003, all five major medical insurance companies immediately announced that they would not reduce their rates and one company even predicted that it would seek a 20 percent rate increase!

Industry observers have consistently failed to find support for the assertion that malpractice drives up health care costs. Americans for Insurance Reform presents data showing that medical malpractice paid losses as a percentage of health care costs have remained constant at less than one half of one percent since 1985! Further, malpractice premiums have remained between a half of one percent and one percent of total health care costs during that same period. In 2002, payouts from malpractice comprised .38% of U.S. health care costs. HCFA data show that while health care costs have risen by 74.7% in constant dollars since 1988, malpractice costs have increased only 5.7% over the same period. The conclusion is straightforward and simple: Medical malpractice premiums are not the cause of skyrocketing medical costs, period.

The real driver of malpractice premium increases is declining profits from insurance company investments. Insurers make the bulk of their profits not from premiums but from investments. When interest rates, stock returns, etc. are high, insurance companies aggressively seek premium dollars to invest. During such periods, insurers severely under-price policies and insure poor risks. This is the so-called “soft” insurance market.