The new insurance obligation is not a cause of hospital’s additional costs

The regulations included in the Act on patients’ rights, in force since the beginning of this year, include the right to seek damages relating to medical events more quickly and at a low cost. The costs of such a system, in accordance with the provisions of the Act, will be borne by hospitals — regardless of whether the insurance obligation exists or not.
Since the beginning of this year, every entity which carries out medical activities has a statutory obligation to conclude accident insurance for its patients. Such insurance provides patients with a full guarantee of receiving damages for medical events. “PIU had participated in consultations relating to the amendment since mid-2010. Already then, we were pointing out that the new law exposes hospitals to the necessity of coping with a financial burden amounting to several hundred million zlotys. We were also informing the legislator that due to the lack of vacatio legis, lack of tools for assessing new risk, as well as lack of tables or publications of court verdicts, only few companies would decide to prepare an insurance offer for hospitals,” said Andrzej Maciążek, Vice President of PIU.

Pursuant to the new regulations, damages for medical events will be awarded by voivodeship committees entitled to award damages in the maximum amount of PLN 100,000 in the case of a bodily injury and of PLN 300,000 in the case of the patient’s death, with the maximum amount of insurance of PLN 1.2 million per hospital for all events. The justification of the Act on patients’ rights includes information that the number of medical errors in 2009 was estimated at the level of 835,000. It should be noted that not every case of a medical error entitles the patient to seek damages. “If we assume that only 10% of cases of medical errors will be settled by voivodeship committees and average damages will amount to PLN 10,000, the total claimed amount will reach PLN 835 million. Such claims will arise regardless of the insurance,” emphasised Andrzej Maciążek.
Insurance is only an administrative instrument which provides patients with a guarantee of receiving damages. “High additional costs for hospitals result from providing patients with new possibilities of seeking damages. The costs of that right will always be incurred by the hospital, regardless of whether they arise from insurance premiums or actual payments of damages from its own budget,” said Dorota M. Fal, Health Insurance Consultant to the Management Board of PIU.

The introduction of the obligatory accident insurance has not abolished the obligation of holding a third party liability insurance policy. Therefore, since the beginning of this year, the legislator has required hospitals to hold two insurance policies. Additionally, guarantee amounts, i.e. insurer liability limits, in third party liability insurance were increased. “This, for purely mathematical reasons, creates a pressure on increasing premiums. The larger the liability, the higher the price,” said Andrzej Maciążek.
In the course of works on the Act, PIU was suggesting vacatio legis of twelve months so that both insurers and hospitals could prepare for new regulations. The suggestion was not accepted. Today, opinions appear that voluntary insurance would be more favourable to hospitals than compulsory insurance. “From the perspective of insurers, there is no difference. Regardless of whether the cost of the insurance premium or of paying out damages directly to patients will be more attractive for hospitals, this does not change the fact of a huge additional burden for hospitals,” said Andrzej Maciążek.

Schedule of works on the amendment to the Act on patients’ rights:
Consultations on the amendment to the Act on patients’ rights commenced in the 2nd half of 2010.

5 October 2010 — PIU informed the legislator for the first time that new solutions meant significant costs for hospitals. PIU did not provide any estimations yet, but pointed out that new solutions would require hospitals to conclude entirely new insurance agreements, next to the already applicable compulsory third party liability insurance agreements.

5 November 2010 — PIU provided the legislator with first estimations. According to them, current average costs of premiums for compulsory third party liability insurance amounted to PLN 100,000 and the proposed solutions would increase those costs several times.

19 October 2010 — a draft amendment to the Act on patients’ rights was submitted to the Sejm for the first reading.
Throughout the whole period of works on the Act, representatives of PIU participated in all meetings of the Sejm’s Health Committee, of the extraordinary sub-committee, as well as in works of the Senate committee.

5 January 2011 — PIU sent a letter to all members of the Sejm’s extraordinary sub-committee within the Sejm’s Health Committee. In the letter, the total cost of new solutions for all hospitals was estimated at several hundred million zlotys.

18 May 2011 — the Act was signed by the President.

22 September 2011 — a consensus conference was held in the Ministry of Finance on which PIU was asked to estimate the impact of new guarantee amounts in third party liability insurance of entities carrying out medical activities and of changes in the Act on patients’ rights.

28 October 2011 — in a letter to the Ministry of Health, PIU pointed out that:
– an increase of guarantee amounts in third party liability insurance would result in an increase of the average premium paid by hospitals and clinics,
– the new regulations in the Act on patients’ rights would result in a necessity of paying another premium amounting to PLN 300,000 p.a.,
– the estimations were based on calculations of the Ministry of Health, which stated in the justification of the Act that the annual number of medical errors should be estimated at approx. 835,000 cases.

1 January 2012 — the amendment to the Act on patients’ rights entered into force.