Pa. Decides Now Not Time to Reduce State’s Medical Malpractice Coverage

There is not evidence of sufficient market capacity at the current time to mandate an increase in primary medical malpractice insurance limits in Pennsylvania, Deputy Insurance Commissioner Randy Rohrbaugh has ruled.

He was responding to a proposal in state law to raise to $750,000 from $500,000 the primary coverage limits health care providers must obtain from private commercial insurance carriers, thereby allowing the state to reduce its participation in the second layer of coverage. But he said he determined that the private marketplace is not in a position to provide the higher primary limits.

“In making this decision, our priority was to protect the consumers who are accessing health care in the state,” Rohrbaugh said. “We did not want to prematurely raise the limits before there is adequate capacity in the medical malpractice insurance marketplace, as this could have an adverse effect on the availability of health care.”

He said that an actuarial study by Pricewaterhouse Coopers shows that since the passage in 2002 of Act 13 and other reforms, there continue to be improvements in the medical malpractice marketplace on many fronts. “However, there is not sufficient evidence of additional basic insurance capacity in the market and, therefore, the legal threshold requirement by the legislature has not been met,” he explained.

He cited concerns that the current marketplace would not be in a position to absorb greater risk, “so it would be irresponsible to allow an increase in limits to $750,000 at the primary insurance layer.”

Health care providers in Pennsylvania are required to carry $1 million worth of medical malpractice insurance: the first $500,000 from a commercial insurance company and the remaining $500,000 from the Medical Care Availability and Reduction of Error (Mcare) Fund. Current law mandates that the limits be increased in the event that the insurance commissioner finds that there is additional basic insurance coverage capacity.

The law proposes that, if the market contained additional capacity, the commercial layer would increase and the Mcare layer would decrease. The law proposed that the increase be to $750,000 of coverage from the commercial market and $250,000 of coverage from the Mcare Fund. Eventually, if the market had the increased capacity, medical malpractice coverage would be provided entirely through the commercial market.