TRENTON – A bill sponsored by Senators Loretta Weinberg and Joseph F. Vitale which would create more predictability in New Jersey’s volatile medical malpractice liability insurance industry and ease pressures on high-risk health care specialties was unanimously approved by the Senate Commerce Committee today.
“New Jersey’s dedicated health care professionals deserve a level of predictability that just isn’t there right now when it comes to medical malpractice liability insurance,” said Senator Weinberg, D-Bergen, and Vice Chairwoman of the Senate Health, Human Services and Senior Citizens Committee. “The current regulatory structure just isn’t sufficient to allow health care providers to plan from one year to the next regarding the cost and availability of malpractice insurance. This bill would at least help to bring malpractice insurance rates under some level of control, and balance the stability of the insurance market with the impact that unexpected rate hikes have on the medical community.”
“The expense and lack of availability of medical malpractice insurance for certain specialties is one of the major cost-drivers for health care in the Garden State,” said Senator Vitale, D-Middlesex, the Chairman of the Senate Health Committee. “At a time when we’re actively trying to expand health care coverage for uninsured New Jerseyans, we need to address the high cost of care and limited access to high-risk medical specialties. If we’re going to make a serious impact on the affordability and accessibility of medical care, we need to reduce the volatility of malpractice liability insurance.”
The bill, S-2934, would require the Department of Banking and Insurance (DOBI) to annually designate a flexible “rate band” for medical malpractice liability insurance rate increases. Under the bill, DOBI would specify a range of rate change – either an increase or decrease between five and fifteen percent – in regards to medical malpractice liability insurance rates. Any rate, supplementary rate information, or change or policy amendment filed by an insurer or rating organization which proposes a rate change exceeding the designated flexible rate band would be subject to DOBI approval.
“Rate increases are sometimes an inevitability, especially when malpractice liability insurance providers have to balance risk assessments for various medical specialties,” said Senator Vitale. “While many health care professionals wouldn’t disagree with common-sense rate increases as part of the cost of business, malpractice liability insurance rates seem to be dictated by anything but common sense. If the rate increase is appropriate, it would continue to pass muster with DOBI regulators, but something has to be done to begin to rein in out-of-control malpractice liability insurance costs.”
The lawmaker’s legislation would also make DOBI responsible for determining the categories, subcategories, specialties and subspecialties of health care providers to which the designated liability insurance rate band would apply. The Department would be allowed to consider the availability and affordability of medical malpractice liability insurance for different categories of practice, the capitalization and reserve requirements necessary to ensure the solvency of insurers, and the current data relating to the frequency and severity of medical malpractice claims and trends in the cost of investigating and settling claims when making regulatory decisions. Finally, the bill would remove the current provision that automatically deems annual premiums in excess of $10,000 a “special risk” and subject to an alternate route rate approval process.
“A recent report by the New Jersey Health Care Quality Institute showcased our State’s highest-in-the-nation health care costs,” said Senator Weinberg. “Add to that the fact that many New Jersey health care consumers have to go out-of-State to be able to see doctors in high-risk specialties, and you have a crisis in the Garden State. We can no longer turn a blind eye towards the cause of this crisis – the volatility of the State’s medical malpractice liability insurance rate structure – and have to start putting basic controls in place to help reverse years of runaway rate increases which hurt health care professionals and consumers alike.”
The bill now heads to the full Senate for consideration.