The Pennsylvania Commission on the Medical Care Availability and Reduction of Error Fund (MCARE Fund) was created in December of 2005 for the purpose of investigating methods to reduce the unfunded liability of the MCARE Fund and the phasing out of the MCARE Program. The MCARE Program was created by Act 13 of 2002 to replace the Pennsylvania Catastrophic Loss Fund, to stabilize the professional liability insurance market in Pennsylvania and to assure continued access to quality health care.

MCARE operated basically by providing additional professional liability insurance to health care providers in Pennsylvania at subsidized premium rates, which were dependent upon actuarial funding programs, that basically paid expenses as incurred without funding for future liabilities, and providing for the abatement of the professional liability insurance premiums for physicians and other providers in Pennsylvania. Certain medical specialties qualify for 100% abatement while other specialties and providers qualify for 50% abatement. Although the MCARE operating expenses have decreased annually since inception, PricewaterhouseCoopers, the actuarial consultants for the state program, have reported that the unfunded liability has reached $2.33 billion.

The Insurance Department issued a report on November 30, 2006 listing the highlights of the Commission’s recommendations, which are as follows:

§      To continue the state’s MCARE abatement program which subsidizes health care providers’ catastrophic malpractice claims payments until MCARE coverage has been phased out. The MCARE abatement program was initially proposed by Governor Edward G. Rendell in 2003 to encourage health care providers to continue practicing in the Commonwealth and has defrayed nearly $1 billion of malpractice expenses for Pennsylvania health care providers;

§      To privatize MCARE malpractice coverage as directed under the Act 13 of 2002 as soon as is feasible, ideally in the period between 2008 and 2011. Currently, most health care providers are required to buy $1 million in malpractice coverage – the first $500,000 from the private market and the remaining $500,000 from the government-run MCARE Fund;

§      To eliminate the MCARE assessments paid by health care providers to support the MCARE Fund once private insurers begin covering the entire amount of required malpractice insurance, thereby reducing health care providers’ medical malpractice costs;

§      To use the public funds currently committed to the MCARE abatement program to retire the unfunded liabilities of the MCARE Fund, once the MCARE program ends;

§      To use any remaining currently committed public funds to mitigate increases in health care provider malpractice insurance costs, with a target of limiting the maximum increase in aggregate medical malpractice liability insurance costs in Pennsylvania to 10 percent annually; and

§      To aggressively promote health care quality initiatives, which will, among other things, reduce future malpractice expenses and maximize public funds that can be dedicated to health care services.

The complete text of the Insurance Department announcement and the “Final Report and Recommendations of the Pennsylvania Commission on the Medical Care Availability and Reduction of Error Fund” are available on the MCARE Program website, which is available as one of the links provided by the MedLaw Blog.