It’s easy to find attention-grabbing headlines about medical malpractice lawsuits with multimillion-dollar payouts for mistakes during surgery, errors in prescriptions and faulty diagnoses. But research shows that high-stakes medical malpractice litigation is more likely, and more expensive, south of the border.
While the United States has seen medical malpractice payouts of over US$200 million, the largest payout in Canada was $15 million. With lower payouts, it is not surprising that Canadian doctors pay lower medical malpractice insurance premiums. One New England Medical Journal study found that U.S. doctors at one point paid as much as nine times more than Canadian counterparts for medical malpractice insurance.
There are several reasons why malpractice insurance premiums are lower in Canada. For one, pain and suffering damages are capped at $400,000, though courts can award additional uncapped damages for things like loss of income and future health expenses.
Canada also has a less litigious culture than the U.S. According to a report from the American Medical Association (AMA), Canadian physicians are sued only 25 per cent as often as their U.S. counterparts. The number of legal actions against doctors managed by the Canadian Medical Protective Association (CMPA) has dropped relatively steadily for the past five years, declining from 891 in 2016 to 732 in 2020. Most of the cases (94.3 per cent) were either settled or dismissed.
Canada’s medical malpractice insurance system differs from those in countries. Typically, insurance companies would vie for business from doctors, but Canada’s medical malpractice insurance industry functions like a monopoly. The CMPA covers 95 per cent of doctors in Canada, excluding some in Quebec. It is a non-profit organization funded by contributions from its members, who are in turn subsidized by the government.
All of these differences contribute to lower insurance premiums.
The employment of doctors in Canada also varies from the employment of their U.S. colleagues, which in turn affects who pays insurance premiums. Typically, Canadian doctors own their own practice, and thus have to cover the cost of their net insurance premiums. In the U.S., on the other hand, 70 per cent of physicians are employed by hospitals or corporations, according to the Physicians Advocacy Institute. Insurance premiums are generally paid for by the institutions that employ them.
On average, overhead costs make up roughly 30 per cent of Canadian doctors’ revenue, according to a survey from the Canadian Medical Association. But the share accounted for by insurance premiums varies greatly depending on the type of doctor. The most expensive premiums are for obstetrics, the field of medicine that deals with childbirth. The premiums for obstetricians in B.C. were $31,416 in 2020, while the median medical malpractice insurance premium in B.C. was $2,568.
Though doctors in B.C. and Alberta pay significantly lower premiums than doctors in Ontario, they pay slightly more than doctors in the prairies, and significantly more than doctors in Quebec. Overall, Canadian general surgeons can expect to pay $14,898 annually for medical malpractice insurance, compared to US$127,083 in a high-cost state like Illinois, and US$11,306 in a low-cost state like Minnesota.
Money paid to insurance companies is only one aspect of the total cost of an insurance claim. The time and resources needed to defend a claim or lawsuit can far exceed premium costs. U.S. doctors on average spend 11 per cent of their career embroiled in malpractice litigation – longer than they spend in school, according to the Health Affairs journal. By comparison, Canadian physicians spend an average of 2.4 per cent completing all administrative forms, including insurance related forms. By age 55, one in three American physicians will have been sued, according to the AMA, with 68 liability claims filed on average for every 100 physicians. In comparison, the CMPA had 732 legal actions in 2020 against a fraction of its 105,000 members.
While Canadian doctors may be faced with high overhead costs, those costs are more than offset by the benefits of lower litigation claims, lower lawsuit claim amounts and less time spent defending malpractice claims.
With lower payouts, it is not surprising that Canadian doctors pay lower medical malpractice insurance premiums. One New England Medical Journal study found that U.S. doctors at one point paid as much as nine times more than Canadian counterparts for medical malpractice insurance.
There are several reasons why malpractice insurance premiums are lower in Canada. For one, pain and suffering damages are capped at $400,000, though courts can award additional uncapped damages for things like loss of income and future health expenses.
Canada also has a less litigious culture than the U.S. According to a report from the American Medical Association (AMA), Canadian physicians are sued only 25 per cent as often as their U.S. counterparts. The number of legal actions against doctors managed by the Canadian Medical Protective Association (CMPA) has dropped relatively steadily for the past five years, declining from 891 in 2016 to 732 in 2020. Most of the cases (94.3 per cent) were either settled or dismissed.
Canada’s medical malpractice insurance system differs from those in countries. Typically, insurance companies would vie for business from doctors, but Canada’s medical malpractice insurance industry functions like a monopoly. The CMPA covers 95 per cent of doctors in Canada, excluding some in Quebec. It is a non-profit organization funded by contributions from its members, who are in turn subsidized by the government.
All of these differences contribute to lower insurance premiums.
The employment of doctors in Canada also varies from the employment of their U.S. colleagues, which in turn affects who pays insurance premiums. Typically, Canadian doctors own their own practice, and thus have to cover the cost of their net insurance premiums. In the U.S., on the other hand, 70 per cent of physicians are employed by hospitals or corporations, according to the Physicians Advocacy Institute. Insurance premiums are generally paid for by the institutions that employ them.
On average, overhead costs make up roughly 30 per cent of Canadian doctors’ revenue, according to a survey from the Canadian Medical Association. But the share accounted for by insurance premiums varies greatly depending on the type of doctor. The most expensive premiums are for obstetrics, the field of medicine that deals with childbirth. The premiums for obstetricians in B.C. were $31,416 in 2020, while the median medical malpractice insurance premium in B.C. was $2,568.
Though doctors in B.C. and Alberta pay significantly lower premiums than doctors in Ontario, they pay slightly more than doctors in the prairies, and significantly more than doctors in Quebec. Overall, Canadian general surgeons can expect to pay $14,898 annually for medical malpractice insurance, compared to US$127,083 in a high-cost state like Illinois, and US$11,306 in a low-cost state like Minnesota.
Money paid to insurance companies is only one aspect of the total cost of an insurance claim. The time and resources needed to defend a claim or lawsuit can far exceed premium costs. U.S. doctors on average spend 11 per cent of their career embroiled in malpractice litigation – longer than they spend in school, according to the Health Affairs journal. By comparison, Canadian physicians spend an average of 2.4 per cent completing all administrative forms, including insurance related forms. By age 55, one in three American physicians will have been sued, according to the AMA, with 68 liability claims filed on average for every 100 physicians. In comparison, the CMPA had 732 legal actions in 2020 against a fraction of its 105,000 members.
While Canadian doctors may be faced with high overhead costs, those costs are more than offset by the benefits of lower litigation claims, lower lawsuit claim amounts and less time spent defending malpractice claims.
