Medical Malpractice

With support from the federal government, more than 500 community and migrant health centers provide health care for about six million people who live in areas with a shortage of doctors and other health care providers. Under the Federally Supported Health Centers Assistance Act of 1992, the government will--for a three-year period that began in January 1993--assume responsibility for malpractice claims filed against these facilities. Grantee centers could save as much as $55 million in insurance costs during that period. The tab for the government could be as much as $27 million--about $19 million in claim payments and about $8 million in contingency margins. Because of possible time lags between when an injury occurs and when a claim is filed and paid, the government could take 10 years or longer to pay for all the compensable injuries that occur at the medical centers. Therefore, the government's estimated costs for claim payments could total about $27 million, $30 million, and $33 million for coverage years 1993-95, respectively. Claims, however, would be paid through the year 2006. It could cost the government more money over time to resolve the grantees' malpractice claims under this arrangement than if private insurance coverage had continued. Because the act provides unlimited dollar coverage for each claim filed and paid--as opposed to private insurance, which sets dollar coverage limits--losses could be about 50-percent greater. In addition, the act makes the government liable for injuries that private sector insurers would not have been liable for.

GAO found that: (1) the Public Health Service is authorized to oversee medical malpractice claims involving community and migrant health center grantees and their health care providers under federal tort claims legislation; (2) grantees could reduce or eliminate their malpractice insurance premiums by $55 million under a 3-year program; (3) claims settlements could total $27 million between 1993 and 1995; (4) a federal tort claim program could increase government costs to resolve grantees' malpractice claims because it does not limit the amount of each claim filed and provides a different insurance coverage; and (5) the total costs to the government will depend on the number of eligible grantees, what services will be covered, and whether the methodology used to calculate future payments is reasonable.