The rising cost of healthcare is an issue that cuts both ways. Democrats make inroads in showing how high medical costs and drug costs are a classic case of corporate greed overtaking the public good, but Republicans have their comeback always ready -- malpractice. The high price of malpractice insurance, they say, is the primary reason why health care costs are up.
It's not, and you and I both know it. Just to be sure, I'll restate the case below the fold. Then I'll discuss a couple of options -- the Maryland plan, and my plan -- on how we can stop letting Republicans poach on this issue and turn health care back into a 100% win for Democrats. Oh yeah, and how we can actually make the health care situation better. That would be good, too.
Listen to Bush's agenda for the new term, and tort reform is right at the top of the list.
"I believe the voters made their position clear on Election Day on medical liability reform," Bush said.
Get that? It's part of his "mandate," he's already
out there pushing hard for 'reform.'
Whenever tort reform is discussed, you better believe that the Republicans will wheel out friendly family physicians as their examples. Why? Because examples of lawsuits that went after Faceless MegaCorp Inc. won't win them any votes. Instead, they have to make it sound like lawsuits are the reason Dr. Bob had to close up shop, and the reason mom's liver pills are so expensive.
Of course, we know that's not the case. According to the Congressional Budget Office (CBO),
"Malpractice costs accounted for $24 billion in 2002, but that figure represents less than 2 percent of overall health care spending."
Further, the cost of malpractice insurance has risen a lot faster than the cost of the malpractice claims. Here's the CBO again,
"The average payment for a malpractice claim has risen fairly steadily since 1986, from about $95,000 in that year to $320,000 in 2002. That increase is nearly a growth rate of 8 percent per year."
Which sounds like a lot, until you realize that malpractice premiums were rising even faster. Over the last few years, malpractice premiums have a growth rate of about 15% a year. In some states, the growth rate is more on the order of twice that amount. New York state has faced an
average 27% increase over the last five years. Caps on malpractice awards already exist in 27 states, and have not appreciably slowed the increase of insurance costs in those states. (Note: that the last link is from an insurance industry site, so if you want to see how good they are at muddying the water and looking pitiful, check out the list of twisted facts at the bottom of that page)
We just passed some good debating points, so I'll say them again:
· malpractice costs are less than 2% of healthcare costs
· malpractice insurance has gone up more than twice as fast as costs
· 27 states already have caps, and it isn't helping to hold down health costs
Getting out the facts ought to do a lot to defuse this issue, but the Republicans have been grinding away on the mammoth hurdy-gurdy for years now, and they've done a pretty good job of drawing that "lawsuit-medical cost" line in people's heads. I don't think we can just lay back and expect sanity to blow these clouds away. We have to offer a plan.
So here's a plan. It comes from the State of Maryland. The plan comes from a special session of the Maryland legislature.
The plan would reduce the cap on damages, cutting in half the maximum that could be paid in non-economic damages from malpractice, and puts a freeze on the already existing cap for "pain and suffering". (Astute readers should notice that Maryland already had caps in place, and was still having skyrocketing malpractice insurance costs.) The cap would be $650,000 total for most cases, with another $300,000 available in wrongful death cases at the discretion of a judge. In addition, the legislation would add a small fee onto HMO insurance -- a fee that would actually only eat into the advantages HMOs hold over other systems -- to create a fund to subsidize the cost of malpractice insurance.
Here's the proposal in a nutshell
· new caps that are lower, though not as low as Republicans would like
· subsidized malpractice insurance paid for through a tax on HMOs
In the spirit of compromise, it gives both sides a little of what they want. In the spirit of modern politics, that means the Republicans think it's the spawn of Satan, because they've come to believe that compromise means they get everything they want. The legislations is expected to be vetoed by Republican Gov. Robert Ehrlich. If legislators override the veto, the HMO groups are already working at setting up other barriers.
If you want to compare this to the Bush plan, Bush is proposing a "hard cap" of $250,000 on all non-economic damages, pain and suffering, etc. etc. forever. This cap is so low, that you can expect that injuries suffered in brain surgery and tattoo removal will end up with the same payout. How's that for a plan? More limits on what the victims can collect, no limits on what the insurance companies can charge, and no evidence that it'll help things. It says something about the effectiveness of Republican PR work that this is seriously considered.
We can't sit still. We need to counter, and we need to do it in a way that captures some public attention. The rising cost of health care really is a crisis, and there really are a lot of doctors caught in a malpractice crunch. We have to do something about it. In looking at comparable problems, I glance back, not to anything in medicine, but to the banking crisis that struck during the depression. A loss of confidence in banks made it nearly impossible for the system to function. Good banks and bad banks suffered alike, until the government put in place systems to restore investors confidence in banks -- systems that included savings insurance under the FSLIC.
So, what I'm proposing is, if we can't federalize health insurance, how about taking a first step by federalizing malpractice insurance? The proposal looks like this:
Basic Malpractice Insurance
Insurance companies get to keep their hand in, by providing insurance that covers malpractice up to a capped amount. Heck, let's make the Republicans spit and use their cap: $250,000. Below this amount, the system stays the same -- except we put limits that would restrict rate increases to actual costs. If the cost rises 5%, hey, by all means, raise the rates to match. But you don't get to go up 15%.
Federal Malpractice Insurance
Judgments that exceed $250,000 dip into a pool of federally insured funds. And where do those funds come from? From us, and from the doctors. By the most generous estimates, medical liability costs about $27 Billion per year. That's the whole canoodle, and includes some things like "unnecessary tests" ordered by doctors to be sure of avoiding suits. When you take out the costs of the sub $250,000 settlements, and you knock this down to just what the Republicans are fond of calling "mega-suits," the total costs should only be a small fraction of that number. So, 290 million Americans add a $5 copay to their doctor's visits to form a "self insurance pool" used to pay claims exceeding $250,000. This system would also add some additional physician oversight in terms of a panel which would review particularly egregious cases and toss those physicians out of the pool, forcing them to make do with completely private insurance.
Recapping:
· Private insurance coverage for the cases below $250,000
· An federally-insured insurance pool for payments above $250,000, funded by patients
· A review board to eject bad doctors from the pool
Obviously, this plan is just a varient on what Maryland is proposing, only without any absoluate caps on damages, with restrictions on what insurance companies can charge, and with patients directly paying for the insurance pool. How is asking patients to pay out $5 better than putting a tax on HMOs? First off, it's a lot more transparent. You know who's paying it, you are. The doctor can't whine about it. The HMO can't whine about it. In fact, both of them should be cutting your costs because their expenses should be much lower than before. Secondly, putting the $5 directly on patients prevents the HMOs for using it as an excuse to raise rates $10, or $50.
Let's get things straight one last time. No matter how the fight over malpractice turns out, it won't make much difference to health care costs. Turning back to those numbers from the CBO:
"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."
Malpractice reform can help some communities hold onto doctors, and maybe help us shake the rats out of the corn. Plus, it should be a lot harder for insurers to justify sharp increases in rates.