How California solved its insurance crisis? Insurance reform: "The periodic insurance upheavals that afflict the nation have nothing to do with lawsuits or the size of damage awards, both of which, in the case of medical malpractice, have not increased significantly. Rather, insurance companies manufacture these "crises" when they decide to boost premiums in order to offset investment losses." Here's a chart detailing the industry's premium rates. Conclusion based on actual experience: from 1976, when caps were enacted, to 1988, when insurance regulation went into effect, malpractice premiums rose 190%. After 1988 and insurance reform, those same premiums went down 2%.

According to this writer, the author of the Proposition 103 measure that caused the reduction in premiums, insurance company profits "soared by $11.9 billion in the first three quarters of 2002." And, "What about the huge losses that insurers insist are forcing them to increase rates? They’re as phony as Enron’s bookkeeping."