Myth vs. Fact

Physician workforce decisions are multifaceted and complex. Compensation, geography, and lifestyle all matter but malpractice risk is a decisive factor for many doctors considering practicing in New Mexico, and one that New Mexico can control. New Mexico is known as an unfavorable state to practice medicine in large part due to our malpractice laws, and while malpractice laws do not cause the physician shortage alone, they significantly contribute to it.

Medical malpractice insurance is a routine cost for hospitals, but the cost of carrying this critical insurance has skyrocketed and become unpredictable and disproportionate to other states. When premiums spike and become unpredictable, hospitals are not always able to absorb those costs without impacting services, recruitment and retention, and other costs. This means a worsening healthcare access crisis if lawmakers don’t intervene.

Premiums are not rising evenly across states. New Mexico is an outlier because its liability structure exposes providers and hospitals to uncapped or loosely constrained damages that exceed national norms. Neighboring states with defined limits and higher legal thresholds have experienced far more stable insurance markets. Further, it is not just that premiums are rising – it is that the number of medical malpractice insurance companies willing to write policies and take on the risk of policies in New Mexico has dwindled, which leaves hospitals with fewer choices and less competitive rates than in other states.

Because the medical malpractice laws in New Mexico have impacted physician recruitment and retention negatively, it is more difficult for hospitals to ensure access to specialty providers, such as labor and delivery, trauma and surgical subspecialists. The outcome is that these services must be reduced or eliminated because the providers are not available.

Proposed reforms preserve full compensation for compensatory damages and do not contemplate denying valid claims.

Medical malpractice insurance reform is about stabilizing the healthcare workforce, beginning to reverse the decline of providers by creating an environment that is safe to practice, and ensuring communities can keep care local. Without reform, patients will continue to bear the cost of our access to care crisis with long wait times and limited services. Improving access is the core issue, and this can be addressed while retaining critically important access to justice for harmed patients.

This issue is not driven by insurer or hospital profits. When malpractice costs rise this fast, the money comes out of patient care, staffing, and community services, not corporate profit.

Physicians per capita does not account for geographic location or specialty. What we know is that while other Southwestern states were gaining physicians – anywhere from 4%-15% growth, New Mexico lost more than 8% of its total practicing physician population. Regardless of what data points are used, the issue is whether New Mexicans can access timely care when and where they need it, and right now, the answer is no.

The shortage is documented by state workforce data, physicians, hospitals, and recruiters. Service reductions and unfilled positions are real and measurable. This is not about politics; it is about maintaining basic access to care.

The goal is not to eliminate medical malpractice claims or to make it more difficult for patients who have experienced medical malpractice to seek justice, but to address the parts of our medical malpractice law that make New Mexico an outlier and push physicians and insurance companies away from our state. Excessive legal exposure does not improve safety; it reduces access.

Reform proposals focus on predictability and proportionality, not making it harder for harmed patients to seek justice.

There is no indication that the medical malpractice insurance environment in New Mexico will self-correct. We – New Mexicans, patients, hospitals, physicians – cannot afford to experiment with inaction.

Hospitals invest heavily in patient safety and transparency and reporting requirements, and these efforts remain critical. An unstable malpractice environment undermines safety goals by encouraging defensive medicine and driving providers out of the state. Patient safety initiatives and malpractice insurance reform are unrelated, but complementary in that both are needed to sustain and increase access to care.

Medical malpractice insurance costs are driven by the risk created in state law, not by how insurance companies are regulated. As long as the legal risk remains unlimited and unpredictable, insurers will raise rates or leave the state – no matter how tightly they are regulated. Fixing the law itself is the only way to reduce risk while protecting patients’ access to care.

The PCF surcharge is only one factor. Most premium increases are driven by New Mexico’s high and unpredictable legal risk — including uncapped punitive damages, costly claims and fewer insurers willing to offer coverage. In fact, recent premiums have increased a whopping 280.5% for PCF-participating hospitals excluding the amount for PCF deficit repayment surcharge.