Nebraska Department of Insurance

EXPLAINATION OF HOSPITAL-MEDICAL LIABILITY SURCHARGE INCREASE

The Nebraska Hospital-Medical Liability Act
Cost of Coverage with the Excess Fund

For health care providers with insurance policies beginning on January 1, 2002 and after, the cost of coverage under the Excess Fund has been increased to 35%. During 2001, the surcharge rate was 20%, which was up from 5% in 1999.

The reason for these increases is relatively simple. The 5% and 20% surcharge rates were artificially low rates. They had been intentionally depressed from the amount necessary to support ongoing operations. In the mid-1990's, hindsight determined that the 40% surcharges in place for a number of years were higher than necessary. As such, a decision was made to charge surcharge rates that would lose money (thus saving money for participating health care providers) until the assets of the Excess Fund were more in line with its liabilities. That has now occurred and the surcharge is being raised again.

Interested in a longer explanation with a bit more history? Our actuary in charge of making surcharge recommendations has written one.