The Houston Chronicle reports, “Your physician spends 10 cents on malpractice insurance from every dollar you pay for health care, according to Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute. Furchgott-Roth notes that premiums vary from $20,000 annually in low-cost states to $200,000 annually in high-cost states.”
How much does medical malpractice insurance cost?
It’s complicated. First, are physicians legally required to hold medical malpractice insurance? In Colorado, Connecticut, Kansas, Massachusetts, New Jersey, Rhode Island and Wisconsin, physicians must have minimum coverage, according to the American Medical Association. States including Indiana, Nebraska, New Mexico, New York, Pennsylvania and Wyoming have requirements to be eligible for state liability reforms. So while legal requirements for having medical malpractice coverage is somewhat flexible, not protecting your assets is, well, a terrible idea.
Because laws and requirements vary from state to state, the price of medical malpractice insurance widely varies as well. Even within states, premiums can differ greatly from county to county-- particularly coverage in urban and suburban areas vs. rural areas. It’s all about location and the density of the physician population in any given area, among other factors.
Interestingly, medical malpractice insurance rates have recently decreased across the board, according to Medical Liability Monitor’s 2017 Annual Rate Survey. “For the overwhelming majority (74.2 percent) of insurers participating in this year’s Annual Rate Survey, rates remained flat between 2016 and 2017, very similar to the percentage with no manual change shown between 2015 and 2016 (75.2 percent). The next largest segment of rate change was increased within the 0.1 percent to 9.9 percent (13.3 percent).”
That being said, the average cost of medical malpractice insurance for an individual physician is about $7,500 per year. Howmuch.com breaks it down like this: General medical personnel may expect to pay between $4,000 and $12,000 a year. But surgeons can pay somewhere between $30,000 and $50,000 a year.
To get a sense of how medical liability premiums are priced, here are a few contributing factors:
Claims History: Like car insurance, if one or more claims have already been made against a physician, this will either increase the premium costs, or make it difficult to find an affordable policy altogether.
Location: Premiums can be dictated by the state, county or even city in which a doctor practices. EP Monthly, a trade publication geared towards emergency physicians, has some ideas about why the cost of medical malpractice insurance varies so widely. Greg Roslund, MD, writes, “Each state’s medical liability system represents a delicate and convoluted interplay between physicians, lawmakers, and patients. Additional factors include supply and demand (how many attorneys are in the state? How easy is it to recruit doctors to the state?), political history (red vs. blue), and the litigiousness of the populace (is suing a physician viewed as a sacrosanct right?). And of course, in the end, it’s all about money.”
Specialization Area: If a physician practices in a high-risk specialty like general surgery, neurosurgery, obstetrics/gynecology, orthopedic surgery, and radiology, premiums will be higher. According to Advisory.com, OB/GYNs are sued at a rate of 85%; General Surgeons, at 83%; and Orthopedists, at 79%.
In addition to these factors, the competitive landscape in the medical malpractice space may also play into the price of a med mal policy, as well as whether or not a physician is full-time (more than 20 hours per week) or part-time (less than 20 hours per week).
So what are some other aspects to consider when getting insurance quotes for medical professionals
Tail Coverage: Tail coverage provides insurance protection for claims reported after a claims-made insurance policy has expired. Insured physicians can get tail coverage if they do not obtain “nose” coverage, otherwise known as “prior acts” or retroactive period, from a new insurance carrier.
Claims-made policies are the most common type of professional liability insurance for physicians. They cover claims brought against a physician resulting from services rendered on or after the retroactive date, and before the expiration date of the policy.
Deductibles: Two different deductible options are typically part of a med mal policy: “Indemnity-Only (Loss-Only)” deductibles are paid when a payment of indemnity needs to be made by the insured; insureds pay an “Indemnity and Expense” deductible even if an indemnity payment is not required. This deductible covers legal fees incurred when a claim is filed.
It’s a reality of the medical profession: Most physicians will get sued at least once during their careers. And finding out the cost for medical malpractice insurance is a primary way to protect a practice, a career, a reputation.
According to a January 2016 New England Journal of Medicine study, three out of every four physicians 65 years old or younger will be sued for medical malpractice. And almost 20% will have made an indemnity payment. The stakes are even greater for physicians in high risk specialties like neurosurgery or obstetrics/gynecology. Of those specialties, a whopping 99% of physicians will have been sued before age 65, and 71% percent will have lost.
So, yes, physicians need sufficient medical malpractice insurance.
The cost of medical malpractice insurance is as complex and personal as any other form of insurance. It must be suited to the exact needs of the insured individual. There are, of course, ranges of pricing for professional liability coverage for doctors. The best way to determine costs is to get direct quotes from medical malpractice carriers based on specialty, location and professional history. Another key point to measure against when selecting a provider is to make sure they have In-House Attorneys. This is especially true if you’re a solo or small practice physician.