Medical Liability Premium Increase Draws Practice Viability Concern

Medical liability insurance premiums have begun an upwards trend after remaining relatively steady over the past ten years, according to a new American Medical Association (AMA) analysis that raises concern for practice viability and care access.

The report shows that there had been increasing stability in medical liability insurance premiums up to 2018, when 80.8 percent premiums stayed the same as the previous year. However, data from the past two years show that premium stability is slowing.

“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,” AMA President Susan R. Bailey, MD, said in a press release.

 “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,” Bailey continued.

In 2019 and 2020, the number of premiums that stayed the same as the previous year dropped to 68.4 percent and 60.8 percent, respectively. Additionally, there was an overall downward trend in the proportion of premiums that decreased year-to-year from 2011 to 2020. In 2020, 8.1 percent of premiums dropped from the previous year, compared to 30.3 percent of premiums that fell in 2011.

More medical liability insurance premiums increased in 2020 than in any year since 2005. In 2018, the proportion of premiums that went up was 13.7 percent. Then, the proportion jumped to 26.5 percent in 2019. The share grew once again in 2020, with 31.1 percent of premiums increasing from the previous year.

The report authors noted that this appears to be the beginning of an upward trend in premium increases that has not been observed in more than two decades.

“The responsiveness of premiums to changes in their determinants and external factors takes considerable time in the medical liability insurance market,” the AMA authors explained. “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.”

The AMA analysis identified that 14 states had premium increases of 10 percent or more, including:

The states and their ratios of premiums that increased by at least 10 percent in 2020 are as follows:

• Kentucky (29.6 percent)
• South Carolina (27.8 percent)
• Maryland (18.8 percent)
• Nebraska (16.7 percent)
• Oregon (16.7 percent)
• Montana (16.7 percent)
• Georgia (14.8 percent)
• Missouri (14.8 percent)
• New Hampshire (13.3 percent)
• Illinois (11.9 percent)
• Michigan (11.6 percent)
• Texas (9.2 percent)
• North Carolina (6.7 percent)
• Virginia (1.3 percent).

The AMA report also found significant differences in premiums by geographical region. For example, OB/GYN physicians in Los Angeles County, California, faced average base premiums of $49,804 compared to $205,380 for OB/GYN physicians in 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,” said Bailey.

She noted that this issue is particularly pressing due to the negative effect COVID-19 has had on care access and practice viability. Many physicians have had to suspend in-person patient visits or elective procedures, and some have had to close their practices.

AMA is partnering with state medical societies to pursue medical liability reforms that will maintain premium stability, such as targeted emergency protections for physicians who continue to treat patients during the pandemic without the necessary resources or support.

The AMA analysis is based on an annual survey of professional liability insurers conducted by the Medical Liability Monitor (MLM) which reports base premiums for three specialties in states where the responding insurers provide coverage.