Awards for Future Medical under the ACA
Tim Mosler

Awards for Future Medical under the ACA

Tim Mosler August 09, 2016 Posted in: Blog Posts, Health Care / MPL
Earlier this month, the Ohio Court of Appeals ruled on the medical liability case Jones vs. MetroHealth Medical Center. A key portion of this ruling pertains to the determination of economic damages related to future medical costs. Specifically, the court ruled to award the plaintiff an amount sufficient to cover the premium on future health insurance policies that the plaintiff would purchase.

This is a radical shift from past practice. Before passage of the Affordable Care Act (ACA), any award for future medical care would be based on the expected care required and economists’ projections of the cost of that care. For many serious injuries, the future medical cost portion of an award alone could be in the millions. Large awards were necessary because it was possible for health insurers to consider the plaintiff’s injury and deny future coverage. The plaintiff would have the responsibility to pay for all future care.

Even after the ACA’s passage, courts have been reluctant to award lower premium-based amounts because of the risk of the ACA being overturned. However, with two Supreme Court rulings upholding key provisions of the ACA, this approach is no longer being applied in all cases. Jones vs. MetroHealth Medical Center is one of the first among a growing number of recent decisions in which the argument has been accepted.

We will hear more on this issue going forward as there are strong arguments on both sides.

On the one hand, awarding damages to plaintiffs based on the future cost of medical care will result in excessive awards. The plaintiff could receive a large sum for medical care but spend only a fraction of that amount if the law continues to mandate that health insurers issue them policies. They will ultimately be compensated twice. This is wasted money in a health care system that cannot afford to waste. It seems logical and appropriate that the plaintiff be awarded the actual amount that they will spend to receive the care, which is the cost of the health insurance premiums.

On the other hand, awarding plaintiffs with amounts sufficient to cover only future health insurance premiums forces them to assume political risk that, realistically, very few are able to assume. If the ACA were overturned, they might be unable to find a company willing to insure them and the amount awarded would probably be insufficient to cover future care. Remember that during the primaries, several Republican candidates promised to repeal the ACA if elected. It is still far from certain that it will remain permanently.

Even if it were certain that ACA would continue, there is also a fairness issue. If a doctor is negligent in his medical care and causes harm to a patient that requires medical care for the remainder of his life, who should pay for it? Should it be spread over all taxpayers and everyone purchasing health insurance through health exchange subsidies? Or should it be paid for solely by the doctor and the doctor’s liability insurer? Many would say that the latter is the only fair answer. It is also the answer consistent with the ACA’s theme of encouraging quality care.

There are large and difficult questions around this issue. Further, while the above discussion pertains to medical professional liability, it can extend to all liability lines that cover bodily injury making the outcome significant to the whole insurance industry and the health care system. Consider the sheer number of automobile bodily injury claims or workers compensation claims with long term medical benefits.

Don’t be surprised if this is ultimately decided by the Supreme Court. And the President we elect in November may appoint the Supreme Court nominee who decides it.

Tim Mosler is a Senior Consulting Actuary based in Pinnacle’s Atlanta, Georgia office. He has worked in the property/casualty insurance industry since 1996 and consulting since 2001. Tim’s comprehensive career has focused on medical professional liability, workers’ compensation, general liability and commercial automobile. Tim is a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries. Since 2007, he has been a member of the CAS Member Advisory Panel and in 2013 he was named to the CAS Committee on Health Care Issues. He is a past member of the CAS Examination Committee.


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