Health care stabilization fund sees rising claim volume; lawmakers press actuarial breakdowns and board membership questions

The Health Care Stabilization Fund (the state secondary insurer for professional liability) projects roughly $47.8 million in approved expenditures for FY26 and an agency request near $48.5 million for FY27, staff told the Committee on Social Services Budget.

Edgar Klein, fiscal analyst, said the fund’s spending is driven by claims: state operations make up roughly 20 percent of expenditures while claims account for about 80 percent. "Open claims at the start of the year grew by 3.8% from 930 claims to 966 claims, and new claims opened during the year increased by 11.1% from 519 to 580," Klein said.

Mister Schultz, the agency representative for the stabilization fund, described the fund’s purpose and governance. He noted the fund was created in 1976 to require defined health‑care providers to carry baseline professional liability insurance and to pay a surcharge for secondary coverage. "Every defined health care provider has a minimum of $1,000,000 worth of coverage," he said, explaining the statutory floor and the surcharge mechanism.

Committee members asked for more granular information. Representative Naber asked which specialties drove claim increases; Edgar said he did not have specialty‑level data on hand but would obtain it. Representatives also asked how percentage‑based surcharge classes (for example certain physician or mid‑level provider classes) translate into dollars. Schultz explained that half the provider groups pay a set fee while the rest pay a percentage of their underlying policy premium; the percentage is set on actuarial recommendations to allocate the fund’s total surcharge fairly across groups.

Concern also surfaced over whether statute or other policy could bar a provider from using the fund. Representative Reese referenced recent legislation and said he was worried certain providers might be effectively barred from access; Schultz said denial of access is theoretically possible in extreme cases (for example removal for repeated litigation), but he said he had not observed that in his tenure.

The committee asked for follow‑up: an actuarial breakdown of claims by specialty and the class counts used to compute surcharge percentages. Staff and the fund agreed to provide those numbers to the committee ahead of next‑week recommendations.

Next steps: KLRD to obtain specialty‑level claim breakdowns and class counts from the fund’s actuarial report; committee to consider whether additional oversight hearings or statutory changes are needed.