Medical liability burden may grow under ACA

Medical malpractice claims and costs are likely to rise as changes from the Patient Protection and Affordable Care Act (ACA) take effect, an analysis by RAND Corp. predicted.

In a report released April 9, RAND researchers explored the potential impact of health reform on liability insurers, focusing on medical malpractice insurance, worker’s compensation and auto insurance as well as other forms of liability such as disability.

They reasoned that increasing the pool of insured patients would increase the number of encounters between patients and physicians and procedures provided. This in turn would raise the likelihood that patients would file malpractice claims due to diagnostic errors or for other reasons.

“Other things being equal, we would expect more treatment to result in more malpractice claims,” project leader David I. Auerbach and colleagues wrote. “Coverage expansions may not only change the total amount of treatment received but also alter the context in which treatment occurs—for example, shifting some treatment from the emergency room to a clinic or outpatient facility.”

Based on previous research, they estimated the increase in healthcare use by a formerly uninsured patient who gained insurance. While evidence suggested that expanded coverage would boost successful claims, it did not determine the magnitude. To address that, RAND analysts devised a model combining data from malpractice claims and insurance databases.

The estimated change in liability payments varied greatly by state, from 0.4 percent in Wisconsin to 7.8 percent in New Mexico. The average impact across all states was 3.4 percent for an aggregate cost of $160 million in 2016 dollars. They cautioned that the estimates had a “wide degree of uncertainty.”

“T]here is important variation across states in the legal environment, in anticipated changes in coverage due to the ACA, and in the structure of insurance markets that suggests that the ACA’s impacts may not be evenly felt across all lines of insurance and all regions of the country,” the researchers wrote. “For example, states with large expected coverage expansions … could experience substantial (on the order of 5 percent) reductions in expected claim costs in auto markets and similarly sized increases in MPL [medical professional liability] costs.”

The study was supported by the reinsurer Swiss Re and in part by pooled grants to the RAND Institute for Civil Justice.