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Malpractice: The Authors RespondTed Frank misstates our reported data and conclusion, and obscures our findings (May/Jun 08). Frank claims that mean premiums fell entirely because the percentage of high-risk physicians declined and repeats the American Medical Association’s claim that rising premiums caused doctors to leave practice. No available data indicate a decline in high-risk physicians in Massachusetts since 1990. Our data reveal that in recent years, other insurers offered lower premiums for high-risk physicians than did ProMutual, which explains their decline in ProMutual’s rolls from 8 percent in 1990 to 4 percent in 2005. We reported premium changes by five tiers, which reveal a different picture than mean premiums for all physicians. Discount-adjusted premiums decreased for nearly all physicians since 1990. High premiums increased for only three practice specialties since 1990, but despite this, one-third of high-risk physicians paid less for insurance in 2005, due to rate discounts. Frank also claims that we improperly compared inflation-adjusted rates with the nominal dollar value of coverage. In fact, we followed standard practice. Actuaries and economists gauge price changes in insurance by adjusting premiums for inflation while keeping coverage limits and policy types purchased constant. This method reveals cycles of pure price decrease and increase for the same product. Frank claims that we cherry-picked by choosing 1990 as a reference point, that any other year would reveal premium increases, and that premiums increased over the long term. Not so. Our Exhibit 1 displays premiums for all five tiers over thirty years; it shows that mean Consumer Price Index (CPI)–adjusted rates increased from $7,095 in 1975 to $21,245 in 2005. But it reveals that all five premium tiers had cycles, rather than steady increases; for nearly all physicians, 1990 was the peak year, and 2005 was the second-highest year; 1980 and 2000 were the two lowest premium years. Our paper explains that ProMutual lacked data on the number of physicians in each rate group before 1990. Thus, we reported mean premiums adjusted by physician counts only since then. For $1 million/$3 million policies, count-adjusted mean premiums decreased from $17,907 in 1990 to $12,551 in 2000 and increased to $17,810 in 2005.
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