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Med Liability Premiums Saw Widespread Increases in 2020

Analysis  |  By John Commins  
   March 30, 2021

An AMA analysis shows the highest prevalence of medical liability premium increases since 2005.

Nearly one-third (31%) of liability insurers increased their premiums at the height of the COVID-19 pandemic in 2020, the highest percentage in 15 years, an American Medical Association analysis shows.

The analysis found that, for a second straight year, there was a big surge in the percentage of premiums with a year-to-year increase. Between 2010 and 2018, the share of premiums that increased maintained a somewhat stable pattern, ranging from 12% to 17%. In 2019, that proportion almost doubled to 26.5% and went up again in 2020 to 31.1%, the analysis found.

However, the analysis noted that it's not clear if the pandemic was to blame for the premium increases, or if they were already in the works when the public health emergency was declared.

"The responsiveness of premiums to changes in their determinants and external factors takes considerable time in the medical liability insurance market," the analysis said. "Therefore, 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."

AMA President Susan R. Bailey, MD, said the premium hikes came at a difficult time for physicians.

"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," she said.

"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 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%).

There was also a striking difference in premiums by geography. For example, in 2020 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," Bailey said. "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." 

“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.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

For a second straight year, there was a big surge in the percentage of premiums with a year-to-year increase.

Between 2010 and 2018, the share of premiums that increased maintained a somewhat stable pattern, ranging from 12% to 17%.

In 2019, that proportion almost doubled to 26.5% and went up again in 2020 to 31.1%, the analysis found.

However, the analysis noted that it's not clear if the pandemic was to blame for the premium increases.


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