Docs, Hospitals Face Heavy Burden With Demise of Mcare
One big IOU is about to be collected. And if Pennsylvania is not careful, it could be yet another chapter in the state’s medical-liability-insurance crisis that in the past has caused patients to lose access to their doctors.
Back in the 1970s, when Pennsylvania had its first opportunity to address this issue, the state thought it would be best to go into the business of selling liability insurance through what then was called the CAT Fund. At the time, it seemed to be the cure.
Of course, we know today that it wasn’t a cure. Instead it only delayed the inevitable.
And since then, the medical-liability-insurance crisis has reared its ugly head on several occasions, most recently in 2002, proving that the CAT Fund, now called Mcare, was not the cure. Instead, it only bought time by borrowing from the future.
Today, the environment for Pennsylvania physicians and patients can best be described as “cautiously optimistic.” Primary liability-insurance premiums, though at historic highs, are currently not escalating, and Mcare abatements and the associated Physician Retention Program have temporarily slowed physician flight.
And, despite evidence that overall liability payouts are still increasing, there is proof that liability payouts paid through the Mcare Fund are down, likely as a result of the fund’s gradually reduced exposure in recent years.
The Mcare Fund currently provides liability coverage for jury verdicts and settlements above $500,000.
There is also cautious hope that further benefits will soon be realized from the reforms contained in Act 13 of 2002, and from the subsequent procedural rules changes decreed by the Supreme Court.
And yet, serious problems lurk just below the surface because the day to pay off that IOU from the 1970s is almost here.
Act 135 of 1996 and Act 13 of 2002 have set in motion the ultimate demise of the Mcare Fund, and estimates of the resultant increase in primary liability-insurance premiums range as high as 40 percent for physicians who must purchase $1 million of coverage in the private market.
An abrupt end of the Mcare abatement program will cause a sudden and massive increase in physician liability costs, especially for the high-risk physicians such as OB/GYNs and neurosurgeons who are so vital to the stability of our health-care system.
The end of the Mcare Fund, coupled with the end of the abatement program, will signal the onset of a multiyear period when physicians will purchase $1 million of liability insurance in the private market and pay a surcharge for Mcare coverage they no longer receive.
This heavy burden will continue to be borne by the state’s physicians and hospitals until the Mcare Fund’s $2.3 billion unfunded liability is retired.
It takes little imagination to foresee the result.
- Physicians will leave Pennsylvania at a time when our aging population needs them more than ever.
- The recruitment of young physicians, always difficult, will become nearly impossible. Asking a young physician to pay Mcare surcharges for coverage he never received is akin to asking someone to assume a mortgage on a house he doesn’t own.
- Finally, it’s worth noting that all of this will occur in a state where reimbursements for the services physicians provide are among the lowest in the nation, a situation that shows no promise of improving in the foreseeable future.
Fortunately, Pennsylvania has two advantages as Harrisburg works to craft a solution.
- First, Pennsylvania has a bit of breathing space, thanks to Mcare abatements and the fact that the Mcare Fund is not scheduled to expire until 2011.
- Second, there is a dedicated revenue stream that can be applied to the retirement of the fund’s unfunded liability.
The Pennsylvania Medical Society, in conjunction with the Hospital and Healthsystem Association of Pennsylvania and several physician specialty societies, has offered a proposal for accomplishing both a smooth transition to the purchase of $1 million of liability insurance in the private market and the retirement of the Mcare Fund’s unfunded liability.
It’s our belief that the best route to transition from a government-run insurance fund to the private market is one that does the least to threaten a patient’s access to care, and one that makes Pennsylvania competitive in the national contest to attract the best doctors.
The Pennsylvania Medical Society looks forward to working with the governor and General Assembly to make this a reality.
Dr. Mark A. Piasio, MD, MBA, is president of the Pennsylvania Medical Society.
Last Updated: 8/13/2008