February 13, 2003

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Peter Budetti, founding director of the Institute for Health Services Research and Policy Studies and professor of preventive medicine, discusses medical malpractice

President Bush is renewing a call for a cap on awards in malpractice lawsuits in an effort to curb healthcare costs. Budetti says that approach won’t do much to curb rising malpractice premiums.

“Caps are for teeth and burning oil wells and not for malpractice lawsuits. Caps address a very small fraction of the people who have claims and claims that are paid, mainly the people who have very serious problems of one kind or another and have therefore been awarded large amounts of money to compensate.”

According to Budetti, insurance companies are raising premiums to cover investment losses.

“The sharp spikes are caused by the fact that the insurance companies aren’t making as much money off of their investments as they had been before, and they have to make up the money somewhere else, so they raise premiums, and then as soon as the business cycle turns around, they start making more money, then premiums level off.

Budetti says the way malpractice premiums are set contribute to higher premiums for some specialists.

“They base their premiums on a person’s medical specialty within that area. Not necessarily on the individual’s actual experience, but on the number of neurosurgeons, for example, that they happen to have in their insurance company at that time. So all it takes is a small increase in the need to generate revenue for the average premium to go way up for some groups because there’s relatively few of them in that specialty.”

Budetti believes it’s more important to improve the healthcare delivery system than change the malpractice system.

“Focus on what’s going on inside of healthcare delivery systems and on making sure that physicians are practicing evidence-based medicine to the maximum degree possible, that there are systems in place to try to prevent error in the first place, that there are systems in place the detect it early on, as quickly as possible.”