Insurance Reform Needed to Lower Doctors' Medical Malpractice Rates, California Consumer Watchdog Testifies in New York

NEW YORK, Oct. 27, 2011 /PRNewswire-USNewswire/ -- The author of California's insurance regulatory reform law testified in New York City today that insurance rate regulation is key to preventing medical malpractice insurance companies from price gouging doctors and preserving consumer access to health care.

California voters enacted insurance reform Proposition 103 in 1988. The law requires "prior approval" regulation of all property-casualty and business insurance rates, requiring insurers to justify and get approval from state regulators before any rate change may take effect.

In the first three years after insurance reform was approved, California medical malpractice premiums fell 20% and then stabilized, even as premiums across the country continued to fluctuate. The average national increase in medical malpractice premiums was 127%, five times the 24% rate of increase in California between 1988, when the insurance regulation law was enacted, and 2009.

"California's medical malpractice insurance industry was price-gouging doctors to rake in profits while blaming rising premiums on injured patients. Only Proposition 103's insurance rate reform gave state regulators the power to force insurers to open their books and back down on excessive rates. New York doctors won't see savings from malpractice insurers without the same tough regulatory oversight," said Harvey Rosenfield, author of California insurance regulatory reform law Proposition 103, and founder of the nonprofit, nonpartisan Consumer Watchdog.

Consumer Watchdog has used the intervenor process created by Proposition 103 to prevent $66 million in unjustified rate hikes for doctors and other health care providers since 2003. The intervenor system encourages public participation by allowing any member of the public to challenge excessive rate increases.

Proposition 103 also required an immediate 20% rollback in premiums that had increased dramatically over previous years, and the state's top three medical malpractice insurance companies were the first to pay more than $60 million in refunds.

Rosenfield spoke to the New York State MRT Medical Malpractice Work Group.

For more information on insurance rate regulation in California, visit Consumer Watchdog's medical malpractice resource page: http://www.consumerwatchdog.org/focusarea/medical-malpractice

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org

SOURCE Consumer Watchdog