Trial lawyers have pointed to Warren Buffett’s purchase of medical-malpractice insurer GE Medical Protective as evidence that medical malpractice insurance is profitable (e.g., this comment thread). Of course, there are two factors to Berkshire Hathaway’s high profitability, both ability to improve the business through sound management and ability to obtain assets cheaply—and it’s possible Buffett bought the now-named MedPro from General Electric because the latter was selling the business on the cheap to get out of insurance.

Of course, if there are inefficiencies in medical malpractice insurance, Buffett is as likely to find them as anyone: the profit motive gives him every incentive to. So what does his MedPro say about the “we need caps” vs. “it’s insurers’ fault” debate over malpractice insurance prices? Here’s what they said in response to the Wisconsin Supreme Court’s appalling decision to strike down caps:

“We believe – as in the case of other states with significant tort reform measures that have been endorsed by constitutional amendments and/or high courts – that such predictability and relative stability in rates over time was due, among other key factors, to Wisconsin’s long-standing cap on non-economic damages.

“Decisions such as this recent one in Wisconsin and in many other states, prove once again that there is significant uncertainty in medical malpractice, and why so many carriers – who have not exercised the discipline necessary for long-term commitments – have failed in this volatile segment of insurance. In fact, it seems that a AAA-commitment to responsible, long-term data-driven rate making, together with forceful actions like Proposition 12 in Texas (where the voters decided by referendum to permit caps) are the best combination to, over the long-term, stabilize loss inflation and ensure a predictable, stable and fair market for health care providers and their patients.”

Filed under: medical, Wisconsin