Libertarian Malpractice Insurance

[Solitaire]

I saw a rather odd thing the other day - a bunch of protesters.
But they turned out to be doctors seeking limits on the punitive
damages awarded by juries. Apparently, the cost of covering the
insurance had the effect of pushing doctors out of the business
of providing medical care.

From a libertarian perspective there ought not be any problem.
Doctors go out of business, eventually the few doctors remaining
will become valued, and the market will reach equilibrium. Yet this
does not happen - why? A libertarian argues that government
interferes resulting in distortions of the market place.

When I buy insurance I’m assigned a rate that I pay based
upon the risk to insure me. If I have an accident my insurance
rates change automatically. According to the report, five percent
of doctors account for fifty percent of the total malpractice payments
in litigation. If insurance rates were based upon this risk the five
percent that causes the problems ought to see their rates rise in
response to the risk. Eventually they ought to be forced out of
business by increasing rates and the problem will correct itself.

If this does not happen as suggested by the action of the doctors
in protest, then all doctors bear the cost of the malpractice of the
five percent. This is very different from the insurance I have. A fixed
flat rate per doctor regardless of risk cannot be a natural thing;
therefore, the government has interfered with the market place
and created an unsolvable problem.

I think I’ve derived the libertarian position correctly. :)

[shanek]

Originally posted by John Lockard
I saw a rather odd thing the other day - a bunch of protesters. But they turned out to be doctors seeking limits on the punitive damages awarded by juries. Apparently, the cost of covering the insurance had the effect of pushing doctors out of the business of providing medical care.

From a libertarian perspective there ought not be any problem. Doctors go out of business, eventually the few doctors remaining will become valued, and the market will reach equilibrium. Yet this does not happen - why?

Because government has abrogated the free market health care system. Without having to pay the enormous price of legislative compliance, doctors would have more money to deal with issues like malpractice. And if it weren't for the government taking actions which cause the cost of health care to skyrocket, the care would be cheaper and more affordable and so insurance payments would be lower.

And let's not also forget that malpractice insurance is heavily subsidized with public funds.

Also, keep in mind that in a free market without malpractice insurance, these doctors could be put out of business by a single malpractice case.

If insurance rates were based upon this risk the five percent that causes the problems ought to see their rates rise in response to the risk. Eventually they ought to be forced out of business by increasing rates and the problem will correct itself.

That's how it should work, and how it would work if the government would get the h*ll out of it. Also, a doctor at little to no risk could opt out of paying for malpractice insurance.

I think I’ve derived the libertarian position correctly. :)

Pretty good, yeah.