Nothing new here. My right-wing plastic surgeon uncle is coming into town this weekend for a family wedding. Though I promised my father I wouldn't start anything, I have permission to finish it. I just want to have my ducks all in a row. This is what I have so far. Any additional references (as objective as possible) would be appreciated.
Limiting medical liability is the centerpeice of Bush's plan to reduce health care costs. You know, so OB/GYN's can practice their love on women. First of all, to believe this would work you must believe the following chain of events would happen: liability caps lead to lower costs for the malpractice insurers, the insurers pass those savings on to doctors in the form of lower premiums, the doctors pass those savings on to health insurance companies in the form of lower rates, the health insurance companies pass those savings on to consumers. It takes just one link deciding to keep their new found savings for themselves, or each keeping their "fair share," for the consumers to be left out entirely. But I'm sure that won't happen.
Alright, so assuming all the savings get passed along in full, the total savings to consumers can be figured by determining the savings to malpractice insurers as a portion of total health care costs. The
CBO says (bold mine):
And based on its own research on the effects of tort restrictions, the Congressional Budget Office (CBO) estimated that the provisions of the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2003 (H.R. 5) would
lower premiums nationwide by an average of 25 percent to 30 percent from the levels likely to occur under current law. (The savings in each state would depend in part on the restrictions already in effect there.)
Savings of that magnitude would not have a significant impact on total health care costs, however. Malpractice costs amounted to an estimated $24 billion in 2002, but that figure represents less than 2 percent of overall health care spending. Thus, even a reduction of 25 percent to 30 percent in malpractice costs would lower health care costs by only about 0.4 percent to 0.5 percent, and the likely effect on health insurance premiums would be comparably small.
OK, 0.5 percent is better than nothing. But does does limiting liability actually reduce premiums. From a Century Foundation
report (link is pdf) on medical malpractice:
An insurance company recently performed a study of malpractice premiums from 1991-2002, a period during which nineteen states had damage caps. It found that:
- Median premiums in those nineteen states with caps rose 48.2 percent (from $20,414 in 1991 to $30,246 in 2002).
- In the thirty-two states without caps, median premiums rose by only 35.9 percent (from $22,118 to $30,056).
- Median premiums in states with caps ranged from $14,699 to $65,956.
- In those states without caps, median premiums ranged from $10,142 to $95,474.
- Only two of the nineteen states with caps (or 10.5 percent) had flat or declining premiums.
- Six states without caps (or 18.7 percent) had flat or declining premiums.
With the exception of a few states, there appears to be little difference between those states without caps and those that have them.
Well, I'm convinced.