The NY Times graph shown here, suggests something quite different than what is actually occurring. Olson suggested that many people would jump at the bait and conclude that the insurers were able to obtain a large mark up. A disinterested expert would never be able to substantiate the claim based just on the information provided. Now to be fair, malpractice pricing is hard to understand and the New York Times editors shouldn't have to be actuaries in order to do a story on med mal. However, they need to do a better job.
The quote by Prof. Chandra at the end of the article is also misleading. Chandra's paper actually finds a relationship between premiums and payouts. The quote suggests otherwise and it may be due to a misunderstanding about how premiums are calculated and losses are estimated. Firms base their premiums on future expected losses, not solely on current payouts. To the extent that current payouts increase that may cause firms to revise upward their assessments of future payouts.
Insurance pricing and regulation is closely related to rocket science (we just added a Ph.D. in physics to our actuarial faculty!), but the level of reporting about this particular issue seems to be at the level of an uninformed undergraduate. Some big questions in the med mal debate are never addressed. Why do we sue doctors, why are so many claims settled without compensation to the plaintiff (these still cost money to resolve), or why are so many litigated claims found in the defendant physician's favor (these are also really expensive). Further, we have the questions of why $250,000 is a magic number for damage caps as this seems wrong as a matter of common sense, and why do we need federal reform as there is no real federal interest in local tort cases? Most of the analysis seems to be a rehash of ATLA or Chamber of Commerce arguments. Why don't we see original analysis? I learned more about medical malpractice research from Walter's post today than I have read in just about all the newspaper articles in the last three years. Ok, maybe a little hyperbole just snuck in, but come on ...it is the New York times we are talking about here: the newspaper of record.