On average, health insurance has increased at around 10% per year for the past twelve years. During the same period, Utah ObGyn premiums have increased at about 8% per year. Remember, this is an average over twelve years; from year to year, insurance premiums can increase a lot or not at all, depending on the insurance cycle. Because of the swings in the insurance cycle, ObGyns in Utah have socked away a lot more money than they would have if their malpractice insurance premiums had increased at the average rate of health insurance. They are still paying less than they would have if their rates increased like yours have for health insurance.

The data supporting these figures come from the Kaiser Foundation (for health insurance) and from Utah Medical Insurance Association (for malpractice insurance.) you can see it here if you want to crunch the numbers yourself.

For surgeons, that is about 6%, for ObGyns that is about 8.5% and for all physicians in general it is about 5%. The proof is here. The figures come from the AMA itself. Obviously, the percentage will go up and down from year to year. In the case of malpractice insurance, just like every other kind of property & casualty insurance, those ups and downs can be extreme because of the insurance cycle. The same cycle affects health insurance, and as you know, health insurance rates have also increased dramatically in the recent past. Currently, doctors are experiencing higher rates as the low rates of recent years shoot above the average so that the trend will return to the historical average.

Considering the risk of injuring someone when you are a doctor, especially an Obstetrician, who has the potential risk of injuring someone that will not die but will require life-long care, it seems to me that the percentage of total income a doctor pays for malpractice insurance is relatively cheap insurance. If I drive a car, I pay a large percentage of my income for auto insurance, to protect me and to protect someone I might injure. The riskier I am as a driver, or the more protection I want, the higher is the percentage of my income I have to pay for auto insurance.

There is a reason for malpractice rates to hover around an average that is different for each specialty. It has to do partly with Medicare which sets doctor and hospital reimbursement rates based on the Relative Value Scale. That scale takes into account the cost of running a medical practice, including the cost of medical malpractice insurance. For each procedure a doctor can bill for, there is a value set my Medicare. As office expenses rise, including malpractice insurance rates, so does the Relative Value. A specialty with lots of Medicare patients, like internal medicine, will be more affected by this than will one like Obstetrics, with younger patients. The RVS has the effect of smoothing out the violent swings in malpractice insurance premiums and thus Obstetricians will be more affected by those violent swings.