Insurance Problems Threaten the Future of Women’s Clinics

Women’s health clinics, which have survived years of anti-abortion politics, now face a new threat--astronomical malpractice and fire insurance costs--that could deal a more severe blow than the rhetoric and arson fires ever did.

Some clinics report that insurance companies have refused to sell them malpractice insurance at all, and others have been able to obtain it only at rates that have increased as much as 400% in the last several years.

While malpractice insurance problems have hit many medical professionals, the women’s clinics, most of which are nonprofit and often operate on small budgets, have been especially hard hit.

Abortions Stopped

As a result, a few centers have had to stop offering abortions and prenatal services. Some have cut back on the number of abortions that they perform in order to obtain more reasonable insurance rates. Many others have cut services to their patients, most of whom are low-income women, in order to fit the costly insurance into limited budgets.

And while some clinics have formed their own self-insurance programs, others have carried on with no malpractice insurance.

“It’s a terrible crisis,” said Lois Schoenbraun, spokeswoman for the Washington-based National Abortion Federation. Two years ago, a carrier refused to renew the insurance for the federation, which includes 300 abortion providers. Unable to find a new policy, the federation spent thousands of dollars trying to form its own insurance company. But after a year, the group was unable to raise the millions of dollars worth of capital needed.

Insurance executives insist that the problems experienced by the clinics are a simple matter of economics: Those who provide riskier services have to pay higher premiums. But Steven Miller, executive director of Los Angeles-based Insurance Consumer Action Network, charged that since there are only a handful of companies nationwide providing malpractice insurance, they have an “almost monopolistic-like hold on those who want to be insured.”

While there are no figures available on how many women’s clinics have had to shut their doors, professionals estimate that hundreds of clinics nationwide have curtailed abortion services in order to get affordable rates.

Abortion Unit Closed

Westside Women’s Clinic in Santa Monica, for example, closed its abortion unit in January after 12 years because it could not get affordable insurance, director Cynthia Emmets said. “We lost our insurance when our carrier decided not to carry community clinics. When we went looking for new coverage, all we could get was a policy for $120,000, compared to the $15,000 we had been paying.”

The clinic, which still provides other gynecological services, had performed about 60 abortions a month, she said. She noted that in 12 years, there were 12 claims against the clinic; all were dismissed or the court found in the clinic’s favor. One claim was settled out of court for $5,000. Defending the claims cost the insurer $52,000, she said.

She considered relying only on malpractice insurance held by clinic doctors, but found she still would not be able to obtain fire coverage for the building because of the threat of bombings by anti-abortion forces. The clinic now pays yearly premiums of $4,500 for routine care.

Laura K. Brown, director of Women’s Choice clinics in California, tells of a similar experience. The 15-year-old nonprofit group, which included five family planning clinics statewide serving 40,000 women, recently closed down its Pleasant Hill clinic and curtailed abortions at its Richmond clinic. She noted that the facilities were charged $5,000 each for their policies, but when the insurer went bankrupt, the only replacement policies they could obtain cost $90,000 each. After two years of searching, she found premiums for $20,000 per clinic.

Clinic officials complain that even though they do not deliver babies and do not perform major surgery, they are being considered in the same high-risk category as obstetricians and gynecologists, who are among the most frequently sued medical professionals. (Federal health statistics show that abortion is a relatively safe medical procedure, with a death rate during the first trimester of one per 100,000 cases, compared to three per 100,000 for tonsillectomies.) Some underwriters insist they do not categorize the family planning clinics the same as obstetricians, but others acknowledge that does happen.

‘Not a Perfect System’

“We’d like to be perfect in setting premiums, but it is not a perfect system. Information is sometimes limited, so insurers go with information they do have on similar procedures, such as gynecology and obstetrics,” said one insurance executive, whose company is a major writer of malpractice policies.

The executive, who asked that his name not be used, said obstetrics and prenatal care are high-risk categories not so much from a medical standpoint but because so many malpractice suits have been filed by “mothers unhappy because they didn’t get a perfect baby, even if it wasn’t the doctor’s fault.”

Insurers point out that because many women’s clinics depend on volunteer or part-time help, continuity of care can be a problem. Having many individuals responsible for a patient’s care can lead to slip-ups--such as failing to provide pre-abortion counseling, getting informed consent for procedures and giving follow-up care in case of complications. Such failures have been successfully litigated.

“We aren’t drawing a red line around abortion clinics, but we are thoroughly investigating their situations before insuring them,” said an executive at one of the few insurance companies that provide malpractice policies in California. “They can get insurance if they meet our high standards. But it certainly isn’t going to be inexpensive.”

When officials at T. H. E. Clinic, a nonprofit facility in the Crenshaw area of Los Angeles, tried to renew its policy, they found that the yearly premiums jumped from $10,000 to $90,000. Irene Hirano, director of the facility, which has 18,000 patients yearly, noted that the clinic does not do abortions or deliveries, but offers pregnant women prenatal health care.

‘Cut Back Services’

“High premiums mean we have had to turn away new patients and cut back services, “ Hirano said, noting the clinic’s yearly budget is $1.2 million. “I hate to think of the services we could be providing needy pregnant women with the money being spent on insurance.”

Tom Kring, head of the Los Angeles Regional Family Planning Council, which distributes $13 million in state and federal family planning funds to 36 agencies in the county, noted that in five years the money paid out in claims was only 5% of what the agencies have paid in premiums. (By comparison, insurance experts say a 50% rate is good.) Regardless, the clinics have had large increases in premiums.

With huge bites taken out of clinic budgets for premiums, the agencies are unable to treat as many clients, Kring said. Those patients turned away are often unable to find alternative services in the overburdened county health system. Without access to family planning, many get pregnant and tax the county hospitals and welfare program, Kring added.

One of the oldest family planning groups nationwide, Planned Parenthood Federation of America, which provides abortions, anticipated the insurance crisis 10 years ago when it began self-insuring its 183 affiliates. Louise Tyrer, the federation’s vice president for medical affairs, noted, “We have not found that litigation is excessive, and we have been able to maintain reasonable rates.” Part of their success, she noted, is that the federation set up a stringent quality assurance program and inspects all clinics every three years.

California clinics have fared better than those is some other states because there are more insurance companies willing to offer malpractice insurance. And the insurance costs, while high, have not risen as quickly as in such states as Florida and New York. The impact in California has also been softened, in part, by a law that limits damages for pain and suffering caused by medical malpractice.

There are indications that there may be “rate relief” for some classes of insurance holders in the next few months, according to California Department of Insurance officials. Milo Pearson, chief of the rate administration bureau, noted that increases in cost of commercial liability premiums have leveled off, and others, including malpractice premiums in general, should follow suit.

‘Financial Problems’ Cited

The insurance industry says rates have been high because of “severe financial problems” caused by losses from large jury awards, he said. With legal reforms taking place and more under consideration nationwide, it is possible more insurance companies will have enough reserve money to offer malpractice policies.

On the federal level, there is legislation pending that would repeal an antitrust exemption to the insurance industry.

Prospects for further changes soon in California’s insurance laws dimmed last month when three bills stalled in the Legislature. One would have required a hearing before the state insurance commissioner if rate increases were above 10%. Another would have made insurance companies subject to provisions of antitrust laws. Failure of the legislation has fueled interest in a ballot initiative that would increase state regulation of the industry and limit rate hikes.