'An unstable situation': Insuring infinity

‘We are effectively insuring infinity’

With tort reform gaining traction as a potential national priority, Medical Economics asked Richard Anderson, M.D., FACP, chairman and CEO of The Doctors Company and TDC Group, where physicians and medical societies should focus their energy. He didn't hesitate.

Anderson pointed to the Medical Injury Compensation Reform Act (MICRA), which was passed in California in 1975 as the foundation for what effective reform looks like. After 50 years of experience with various state-level malpractice laws, he said the evidence points clearly to one intervention above all others: caps on non-economic damages.

"Pain and suffering is very difficult to quantify," Anderson said. "What is grief worth? What is pain worth?"

The absence of any ceiling on those awards creates a system where a similar injury to a similar patient can be worth $50 million in one jurisdiction and $2 million in another.

"It is inherently inequitable, yet that is what our system is," he said.

The problem goes beyond fairness. In states without caps, Anderson argues, insurers are effectively being asked to cover unlimited exposure. A $900 million malpractice verdict — a real, recent figure he cited — simply cannot be underwritten in any sustainable way.

"You cannot collect enough money from physicians and hospitals to accommodate verdicts of $500 million or $900 million," he said.

The broader argument he makes is financial. Health care operates as a zero-sum system, and every dollar extracted through a massive verdict is a dollar unavailable for care.

"If we take $100 million for one case, that is $100 million not available for the system as a whole," Anderson said.