Again, I don't know where you get that idea. Life insurance would have no bearing on whether a firm takes a med mal case. And large law firms are going to be looking at the same factors as small ones in looking at whether to take a tort case. My guess is that you don't have any experience in this area. The firm I'm associated with does mainly tort litigation, so I do know how these kinds of decisions are made and what it costs to litigate tort cases. While med mal cases are certainly not cheap to litigate, they rarely reach the kind of costs you seem to think are involved. And, indeed, in many cases the awards for non economic damages in a med mal claim will be below the cap anyway, so the cap doesn't affect most cases. It certainly does lower the awards in some cases.
You miss the point. Economic damages are not capped, so if the plaintiff has $2 million in lost wages, medical bills, etc., he or she can still claim all that. Plus get up to $700k (in Missouri) for non economic damages, i.e. pain and suffering, in ADDITION to that. That's still a pretty good outcome. These kinds of caps are not the great evil that some plaintiffs lawyers like to paint them to be. There are other kinds of caps or tort limits that are more troublesome than this.