Medical malpractice costs make up only a tiny fraction of total health care costs. According to a study by the Consumer Federation of America, medical malpractice costs, as a percentage of health care costs, are at an all time low, 0.55 percent. Report author J. Robert Hunter, former Texas Insurance Commissioner and Federal Insurance Administrator, said, “Medical malpractice insurance is amazing value, considering that it covers all medical injuries for about one-half of one percent of health system costs!” Memo from to Interested Persons with attached spreadsheet prepared by J. Robert Hunter, Director of Insurance, Consumer Federation of America, November 14, 2001.
Despite the hype, juries are extremely conservative while insurance companies are making huge profits. The average claims payout by medical malpractice insurance companies is about $30,000 per year and has been virtually unchanged for the last decade, according to a 2001 study by the Consumer Federation of America of actual claims paid. In fact, total insurance payouts to all claimants have hovered between $2.5 billion and $4 billion per year. Memo from to Interested Persons with attached spreadsheet prepared by J. Robert Hunter, Director of Insurance, Consumer Federation of America, November 14, 2001. By comparison, Americans spend twice that much – about $8 billion – on dog food each year. As a result, medical malpractice insurance companies are raking it in, with profits 65 percent higher than the rest of the property/casualty insurance industry over the last decade. “‘Malpractice Suits Not Driving Medical Costs Up,’ Says Group,” Times Picayune, May 5, 1999.
Medical malpractice litigation in this country is far from frivolous. In a major study released in 1999, the National Academy of Sciences Institute of Medicine found that up to 98,000 people are killed each year by medical errors in hospitals — far more than die from car accidents, breast cancer or AIDS. Kohn, Corrigan, Donaldson, Eds., To Err is Human; Building a Safer Health System, Institute of Medicine, National Academy Press: Washington, DC, 1999 (These figures vastly underestimate the magnitude of the problem since hospital patients represent only a small percentage of the total population at risk). Yet eight times as many patients are injured by medical malpractice as ever file a claim; 16 times as many suffer injuries as receive any compensation. Harvard Medical Practice Study, Patients, Doctors and Lawyers: Medical Injury, Malpractice Litigation, and Patient Compensation in New York, 1990.