The Truth About Medical Malpractice Insurance: It Ain't The Lawyers!

You've often heard that one reason health care costs are skyrocketing in this country is because doctors pay so much for medical malpractice. Your medical bill is huge because we doctors have to give half our income to an insurance company to pay off all of those frivolous law suits.

But what if I told you that your health insurance probably costs more than your doctor's malpractice insurance? I'm serious. How do I know? Well, to start with, I'm a doctor who pays for his own medical malpractice insurance, and this is my bill. That's right -- $3,549 is the total I'm paying for my malpractice insurance for all of 2013! I bet some of you pay more than that for your car insurance.


Am I unique among doctors in how little I pay for medical malpractice? Not really, but before we discuss what other doctors pay, I'd like to discuss national trends for medical malpractice. Believe it or not, the cost of medical malpractice has been dropping, nationally, for about a decade. That's right: dropping!

In 2003 there were nearly 17,000 paid medical malpractice claims in the U.S. totaling nearly $4.5 billion (pages 9-10). By 2011, the number of paid claims had dropped below 10,000 and the total amount paid was less than $3.2 billion. That's a 40 percent drop in the number of paid claims and a 29 percent drop in the total amount paid.

What about hospitals? Surely hospitals are still getting killed by law suits, right? Well no. In a study of the financial records for 387 California hospitals, the average that hospitals paid for malpractice in 2003 was just over one percent of their total income (figure 10). Not much, but by 2011 that had dropped to just over six tenths of a percent (0.6 percent) of their income which was less than one penny for every dollar they brought in. Again, that's nearly a 40 percent drop.

My own malpractice insurance reflected this trend. In 2003 I paid over $8,000 for medical malpractice but, by 2012, it had dropped to just under $3,000 before rising slightly to just over $3,500 this year. Now, not all malpractice rates in the US are as low as they are in California. In fact, if you're a doctor in New York or

Pennsylvania, you might have already punched your computer screen more than once by now.
Although medical malpractice rates have dropped considerably in the U.S., not every State has felt the love evenly. In 2010, for example, six states accounted for over half of all the money spent in medical malpractice law suits, and one fifth of all the money spent on medical malpractice was spent on suits in New York alone, a state with only about one-sixteenth of the U.S. population.

Even so, if the cost of medical malpractice is falling nationally, how can it contribute to rising health care costs? One reason that's often given is the cost of defensive medicine: we doctors are so terrified of being sued that we often order many unnecessary tests on our patients just to avoid these law suits.

Okay, I admit I don't want to be sued either and it's hard to quantify how many tests I, or any other doctor, might order out of fear alone. But I can tell you that when I order an expensive test like a CT scan, I normally have to contact my patient's insurance company to explain why I want the test or they won't pay for it. I'm not the only doctor who has to do that, so knee jerk defensive medicine isn't as easy as you might think.

Also, if the cost of malpractice is going down because fewer doctors are being sued each year, why would the cost of defensive medicine be increasing? Am I the only doctor who's looked at his malpractice bill lately? Speaking of other doctors, last year I took the opportunity to survey many of the other doctors who practice near me by asking them how much they paid for their medical malpractice insurance.
In my admittedly informal survey, I found that other internists and family practitioners pay about what I pay.


A cardiologist who does angioplasties pays about $5,500 a year. An ophthalmologist might pay $7,000 a year; emergency room doctors pay about $12,000 a year; anesthesiology: $14,000; general surgery: $18,000; and orthopedic surgery: $20,000 a year.

For comparison, my family's health insurance (for a family of four that has no medical problems) costs just over $20,300 this year. So my family's health insurance cost almost six times what my medical malpractice insurance costs me, and slightly more than what an orthopedic surgeon in California pays for his malpractice insurance.

For a long time we've been in the middle of a great national debate on controlling our crippling health care costs. The next time a hospital, an insurance company or a politician says we can't control these costs because malpractice is so expensive, why don't you ask them if maybe they'd like to show you the real numbers and start looking at the real problem. Because now you know: it ain't the lawyers.

For more by David Belk, click here.