SALEM - SAIF Corp., the state-owned workers' compensation insurer, will consider providing medical malpractice coverage for doctors at Gov. Ted Kulongoski's request.

Kulongoski said Wednesday he proposed the idea because the state is "in the midst of a rural health care crisis" as obstetricians and other specialists limit or leave their practices due to soaring insurance premiums.

The governor said a suggestion that doctors establish a physician-financed liability fund, as lawyers have done, has merit. But he said a better plan may be for the SAIF Corp. to "step to the plate and help solve this problem."

SAIF Board Chairman John Egge told the House Judiciary Committee at a Wednesday hearing that directors would consider the idea but that there's no assurance it would resolve the insurance problems.

"There is no magic bullet," Egge said.

SAIF directors are appointed by the governor. The nonprofit company is Oregon's biggest workers' compensation insurer, covering about half of the business policyholders in the state.

The Judiciary Committee has held three days of hearings this week looking into the rising cost of malpractice coverage in high-risk practices.

Survey results released Tuesday by Oregon Heath and Sciences University indicated that one in three obstetricians plan to quit that practice in the next five years, Kulongoski said.

About 60 percent of the state's obstetricians responded to the survey.

State Insurance Commissioner Corey Streisinger told the House panel that physicians' liability coverage "is a natural fit" for SAIF, since medical insurance premiums and the availability of medical specialists are major factors in controlling the costs of workers' compensation.

Doctors want lawmakers to clamp a limit on noneconomic, also called pain and suffering, damages on grounds that spiraling jury damage awards are pushing up rates and making insurance unaffordable.

Former Republican state Rep. Kevin Mannix, a Salem lawyer who lost the governor's race to Kulongoski last year, urged the House committee to consider making medical malpractice a no-fault system like workers' compensation.

Injured parties would give up the right to sue in for damages in exchange for being compensated through a state-regulated claims process.

Meanwhile, the Senate Transportation and Economic Development Committee was told by an economist Wednesday that SAIF should be sold.

"There is no reason for the state to be in the insurance business," said William Conerly, a Portland economic consultant who studied SAIF for a report to the Cascade Policy Institute, a Portland free-market think tank.

Conerly believes SAIF has at least $200 million in excess reserves, and Kulongoski said last week that legislators should consider dipping into SAIF's more than $2 billion in reserves to help the ease the state's budget problems.

An audit report done for the state by a private firm two years ago said "reasonable" reserves for the state-owned insurer to ensure workers' compensation claims are paid would range from $1.7 billion to $2.3 billion, state auditors told the Senate panel.

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