(Via Marginal Revolution) There’s an interesting editorial in Saturday’s Wall Street Journal on the Med Mal mess:
On its face, price gouging is a peculiar explanation for recent increases in insurance premiums. Is greed new to the world? Were insurance companies followers of Mother Teresa just a few years ago? If greed and gouging are the explanations for rising premiums, why did the St. Paul group — one of the nation’s largest suppliers of medical malpractice insurance — pull out of the market in 2001? Were the profits from all that gouging just too much for St. Paul’s guilty conscience? And consider that almost half of doctors are insured through mutual, i.e., doctor-owned, insurance companies. Are the doctors gouging themselves?[...]
In addition to being highly variable, medical malpractice insurance premiums are creating problems because they are simply too high, at least in some parts of the country. Our study examines how tort awards, like malpractice premiums, are much higher in some states than in others — for reasons having little to do with medical malpractice. For example, awards per doctor are approximately $10,000 in Pennsylvania but just $1,668 in Wisconsin. Is medical malpractice really six times worse in Pennsylvania than in Wisconsin? More plausibly, the reasons for Pennsylvania’s higher awards are found in legal and cultural differences, including the Keystone state’s elected judges and the redistributive fervor of the Philadelphia jury.
States with partisan elected judges, for example, have medical malpractice awards per claim that are $36,000 higher than in other states. It’s also well-known that the Philadelphia jury, like its cousin the Bronx jury, likes to redistribute the wealth. Between 1999 and 2001 there were 87 verdicts over $1 million in Philadelphia, almost as many as in all of California (101).