iStock_000004391035SmallA recent report by the Rand Corporation, sponsored by the U.S. Department of Health and Human Services, concludes that the cost of medical malpractice insurance may actually increase under the Affordable Care Act a/k/a Obamacare.  The increase could be up to 5% in some areas, although this is an early and inexact estimate.

According to David Auerbach, the study’s lead author and a policy researcher at RAND, “the Affordable Care Act is unlikely to dramatically affect liability costs, but it may influence small and moderate changes in costs over the next several years.”

The major premise of the article is that the Act will lead to an increase in the number of individuals with health insurance, which will lead to more people seeking medical care, which will in turn lead to more malpractice claims, which could drive malpractice costs higher.

One variable from state to state: whether medical costs are deducted from liability awards.  In Nebraska, if a health care provider pays all or a portion of a claimant’s medical bills, those amounts are presented to the jury, who knows nothing of the fact that the bills were forgiven, and the judge later deducts that amount.  Long term changes in the cost of malpractice insurance will depend on a number of factors, including:

– modifications of tort law,

– changes in the pricing structure for health care,

– changes in the number of practicing physicians, and

– increased efforts by Medicaid to recover a portion of injury payments.

Stay tuned as we watch for how this develops.