An announcement early this week of a big decrease in medical malpractice insurance rates for many Kansas doctors came as good, though not completely unexpected, news for physicians in Lawrence.
But local physicians contacted said that even more important is the extent the rate decrease affects a surcharge doctors have been paying into a state fund to cover additional malpractice insurance above what is provided by insurance companies.
Kansas Insurance Commissioner Fletcher Bell said Monday that he has approved an almost 21 percent decrease in medical malpractice rates for doctors who are insured by St. Paul Fire and Marine Insurance Co., St. Paul, Minn. The decrease affects about 40 percent of Kansas doctors in private practice, or 1,200 physicians, and will go into effect July 1.
The commissioner also said he is considering a 12 percent premium reduction from a company that provides medical malpractice insurance to another 40 percent of Kansas doctors, Medical Protective Company, Fort Wayne, Ind.
DR. DONALD Hatton, a doctor of internal medicine with the Reed Medical Group in Lawrence, said the announcement of the decrease was "absolutely" welcome.
Hatton and other local doctors said they thought the lowered rates reflect a national trend both in a decreased number of malpractice lawsuits being filed and in tort reform concerning malpractice insurance that has been passed in some states.
Hatton said he expects the Minnesota company's decision will set a trend with other companies and he expects the Kansas Medical Mutual Insurance Co., which provides his medical malpractice insurance, to also decrease rates.
But Hatton and other physicians said the real effect of the decrease won't be known until the state insurance commissioner announces the rate doctors must pay into a fund that provides additional malpractice insurance.
THE KANSAS Health Stabilization Fund, which costs more to subscribe to than the malpractice insurance itself, provides coverage for malpractice claims between $200,000 and $3 million, depending on the amount of coverage doctors buy.
In his announcement, Bell said there would be a decrease in the cost of premiums for this fund but said the amount has yet to be determined.
Hatton said he expects that the decrease in both malpractice costs and the Health Stabilization Fund could amount to about 30 percent overall.
Dr. Phillip Godwin, an anesthesiologist who carries malpractice insurance through the Minnesota company, said the lowering of rates is welcome. But he said that until a trend shows up over time, he's not sure of the long-term effect.
Doctors should "enjoy it while it lasts," he said. "But there have been pauses (in rising malpractice insurance costs) before. We'll have to wait and see."
GODWIN SAID his own overall medical malpractice insurance rates have gone from $8,700 in 1983 to about $32,000 last year.
And Godwin also said that in the short term, a decrease in medical malpractice insurance rates will not lower costs to patients because doctors have not been able to increase rates to match increases in malpractice insurance costs.
"Most of our charges are limited by third-party payers," he said, referring to the state and federal Medicaid and Medicare programs and to other health insurance plans.
If medical malpractice rates go down, Godwin said, "it will help us get caught back up" from "tremendous increases for malpractice insurance."
Bob Wagner, business manager for Lawrence Family Practice Center where seven physicians, including Godwin, practice, said overall medical malpractice rates for physicians in his office have increased 430 percent since 1983.
WAGNER SAID malpractice premiums remained steady last year and that was about what they expected to happen again this year.
Wagner said that if both the insurance company rates and the Health Stabilization Fund surcharge come down, "after what we've been through since 1983, we'll be ecstatic."
Another part of the insurance reduction package announced by Bell is for hospital professional liability. He said rates to Kansas hospitals offered by Phico Insurance Co., Mechanicsburg, Pa., would drop 8 percent.
Dennis Strathmann, Lawrence Memorial Hospital's assistant executive director of finance, said that although Phico provides LMH's liability insurance, he did not think the announced rate reduction would apply to LMH because it is a city hospital.
"We take an exemption for municipalities," he said. "Our malpractice is a little lower than other not-for-profit and for-profit hospitals. We have immunity up to a $200,000 limit."