Based on comments from Georgia’s physicians, hospitals, nursing homes, and insurers, it is clear that there is no single silver bullet to fix the problem. Both short-term and long-term solutions are being searched in an effort to help the healthcare providers impacted by large insurance premium increases.

Georgia is not alone in facing this crisis. Other states have already dealt with the issue such as Nevada, which passed recent legislation placing caps on damages in civil suits. Further, Mississippi’s Legislature went into Special Session today to address its concerns on the drastic rate increases.

The focus of this meeting was to hear about availability and accessibility to malpractice or liability insurance for physicians, nursing homes, and hospitals. This is especially problematic in Georgia with the departure of carrier, St. Paul.

The State’s Consumer’s Insurance Advocate, Cathey Steinberg, provided an update on the Action Committee formed by Governor Barnes to address the needs of the uninsured in Georgia – this group is looking at small group policies, risk pooling, etc. Georgia has been approved to receive a grant for more than $1 million to find ways in which to help the uninsured. This Action Group will also make a report on its findings.

Some representatives of hospital groups, including Holly Snow, Monty Veazy, and Jimmy Lewis, provided information to these Senators on what hospitals around the State were experiencing regarding renewals for insurance. Grady Memorial Hospital in Atlanta paid $560,000 for malpractice coverage in 1996; in 2002, its rate was $5.8 million. Meriwether County Hospital paid $740,000 in 2000; it was quoted in 2002 a rate of $2.5 million. There are basically two carriers writing policies for hospitals. Some hospitals have elected to go "bare" per Ms. Snow as rates are too high. There are a number of problems – Medicaid, Medicare, and uninsured patients are drains on hospitals. Medicaid and Medicare do not pay full costs. Added to that are the charity care and bad debts incurred by facilities. Thus, it is difficult, if not impossible, for hospitals to pay the increased rates.

Ms. Snow indicated that this was both a short-term and a long-term crisis for hospitals. Georgia is not alone as Nevada had to close its largest trauma center and allow the physicians to become state employees before it worked its situation out. Ms. Snow also mentioned that the Georgia General Assembly gave nursing homes $20 million to help address its insurance needs, but she conceded that nursing homes have patient case loads of 80-85% Medicaid patients. She asked that the Legislators look at what California had done with respect to tort reform as one solution.

Monty Veazy stated that some of his Alliance members had become so plagued by the problem that those that could afford to were creating off-shore companies in an effort to insure themselves. Additionally, some of the rural facilities were being provided coverage under these off shore entities. He also told the Legislators that Wellstar had eliminated trauma services. Additionally, Floyd Medical Center was under pressure to cease providing trauma care due to the costs. There are also issues with physicians as hospitals are finding increasing difficulties in getting doctors to agree to have rotations at hospitals due to the hours and numbers of indigent patients that they see. Thus, it has been a quality of life issue for doctors. There has been some discussion of providing immunity for some specialized physicians such as obstetricians, orthopedists, etc. Mr. Veazy also believes that there is no quick fix to this problem. He claimed that insurance companies left the market because there was no money being made on these lines of insurance. Additionally, hospitals are encountering problems in receiving quotations made just hours prior to elimination of coverage. He cited the average costs of litigation, with the hospital where he personally serves on its Board, as $150,000. There are additional problems with hospitals which have nursing homes attached. These have higher risks and incur larger rates. The average hospitals’ payor mix in Georgia is 54% Medicaid.

Jimmy Lewis noted that some of his facilities have received as little as 4 hours notice on renewals. Deals are being done at the close of the business day. Many hospitals are not educated about insurance. He stressed that this is not really a healthcare issue for the community but rather an economic development issue. Without healthcare, communities cannot attract businesses and cannot incur growth. Mr. Lewis claimed that perhaps that regulating the surplus line carriers (which are the carriers of last resort) would be a solution as these are not regulated in Georgia.

There was discussion about the internal risks that hospitals incur and Ms. Snow indicated that the Partnership for Health and Accountability was looking at medical errors and patient safety within facilities.

It would appear that the Deep South states are more at risk. None have had significant tort reform.

Ray Williams with the Medical Association of Georgia stated that physicians have the same issues as hospitals on getting insurance coverage. A survey has been sent out to MAG members in an effort to understand more about the problem of insurance. MAG Mutual is writing coverage for physicians in Georgia. There are also some physicians getting coverage from AIG and some special insurers are writing policies for specialty practices. Otherwise, there are few options.

Earl Rogers with the Georgia Chamber of Commerce stated that the business community recognizes the concern but it does not know the root or genesis of the issue. He also acknowledged that lack of availability of insurance is an economic development issue. Access to affordable healthcare is essential for business and communities where healthcare is cost prohibitive are not attractive to business.

Sen. Hooks stated that Georgia does not wish to have a Special Session to address this issue.

Gould Hagler and Dwight Bagley spoke to those present about the insurance industry perspective. They claimed that the insurers giving short notice on renewals were companies not admitted in Georgia. More rate regulation will not be the solution. More constraints on the insurance industry will only cause further problems with availability. Mr. Bagley stated that he had been in the brokerage business for 30 years and recruited a malpractice carrier to Georgia the last time this crisis had appeared. He believes carriers have withdrawn from the market as the stock market returns have not been as profitable and September 11 has caused a $30 billion decrease for reinsurance. Insurance companies want a fair or reasonable rate of return for their investments. Bagley also stated that the plaintiff’s bar was basically seeking a "lottery" in Georgia, and thus sees that tort reform is needed. There are six surplus line carriers who will rank physicians; two which deal with hospitals and five which evaluate nursing homes in Georgia. Those who are writing include MAG Mutual, GE Medical Protective, Mutual Insurance of Alabama, and Doctors Medical.

Sens. Hooks, Cheeks, and Golden are seeking information on this issue as well as possible solutions.