Many physicians are holding out for federal tort reform, which they believe is key to lowering their malpractice insurance costs. The doctors' perspective was expressed this weekend in the Washington Post by Dr. Arthur Feldman, who wrote in "10 Things I Hate About Health-Care Reform":
Malpractice costs rise each year, as do the number of frivolous lawsuits. Our practice has seen a 10 percent increase in malpractice expenses this year. Sure, doctors make mistakes, and patients deserve fair compensation for their injuries and lost wages, but in this area of the law, physicians and hospitals are too often at the mercy of capricious juries.
I've got a message for you doctors: You're being snookered.
The costs of malpractice suits and awards are not the only driver of the cost of malpractice insurance. They may not even be the primary driver of malpractice insurance costs. Insurance companies don't just take in premiums and pay out damages. Insurers rely heavily on return from investments for profits, and during times of economic downturn insurers tend to crank up premiums to cover investment losses.
And when an insurance company has a really disastrous quarter because of bad investments, they make excuses to stockholders by blaming out-of-control litigation.
Americans for Insurance Reform (AIR) documented a long-standing pattern of physician malpractice insurance premiums going up during times when the actual amount of awards payouts were stable or even going down. I say again, you doctors are getting snookered.
The insurance lobby has done a bang-up job persuading doctors that the only way to reduce malpractice premiums is to stop greedy litigants from filing frivolous suits. The truth is, the insurance companies charge what traffic will bear, or as much as state insurance boards will let them get away with, no matter what happens in courts.
About Those Out-of-Control Juries
As I've also written in the past, tort is mostly a state issue. Most personal injury lawsuits, including malpractice suits, are filed under state laws. And state laws are all over the map. In the past several years more than half of the states have enacted rigorous tort reform laws that include caps on non-economic and "pain and suffering" damages, raising the burden of proof to bring suit, regulating lawyers' compensation practices, etc. etc. In other words, there's a better than even chance the tort laws of the state you live in already have been "reformed."
Medical malpractice claims, inflation-adjusted, have dropped 45 percent since 2000, according to AIM. A great many individual states, such as Pennsylvania, have had dramatic reductions in the number of medical malpractice cases in the past several years.
As to the "frivolous" nature of medical malpractice cases being filed -- there are all kinds of reports with all kinds of numbers. The Harvard School of Public Health did a study in 2006 that showed "frivolous lawsuits" were not the chief cause of expenses.
[T]he authors found that the claims that did not involve errors absorbed a relatively small piece of the costs of compensation. Eliminating those claims would decrease the system’s compensation and administrative costs by no more than 13% to 16%. "Many of the current tort reform initiatives, such as caps on noneconomic damages, are motivated by a perception that ‘jackpot’ awards in frivolous suits are draining the system," explained Michelle Mello, an associate professor of health policy and law at HSPH and a co-author of the study. "But nearly 80% of the administrative costs of the malpractice system are tied to resolving claims that have merit. Finding ways to streamline the lengthy and costly processing of meritorious claims should be in the bullseye of reform efforts."
Let me repeat that -- Tort reformers have been telling us for years that costs are too high because so many juries are giving away jackpots to plainiffs with frivolous suits. Therefore, they say, getting malpractice costs under control requires finding ways to prevent so many people from filing lawsuits. But the alleged frivolous lawsuits aren't the real problem. Many physicians, like Dr. Feldman, have been sold the bill of goods that it is the problem, however. So they stand with the insurance industry to block reform. Snookered, I tell you.
No Tort Reform Without Health Care Reform!
The cry from many physicians is "no health care reform without tort reform!" They should turn that around -- no tort reform without health care reform!
Since so many states have capped noneconomic and pain-and-suffering damages, the big bucks are being paid for economic damages. "Economic damages" are costs the plaintiff can document at time of trial, including actual medical bills and written estimates for treatment that the plaintiff must pay. If we had real national health care reform, in particular single payer, plaintiffs wouldn't be able to claim those costs.
According to Tom Baker, a professor of law and health sciences at the University of Pennsylvania School of Law and author of The Medical Malpractice Myth, obstetrician-gynecologists pay huge premiums because injury to a newborn can mean a lifetime of medical bills. In comparison, gerontologists’ premiums are exceedingly low.
And you doctors are holding out for tort reform ... why, exactly?
Personal note: Often when I write about tort reform I get razzed because I also blog for a mesothelioma litigation site. But, full disclosure, I'm not contracted by the law firm but by the technology company that runs the site, and nobody tells me what to write or what opinions I'm supposed to express. And I was hired because I already was writing about tort reform and health care reform on my politics site. However, if you are in favor of tort reform because you want to hurt trial lawyers, eliminating health care costs from awards would do it. Just saying.
The Bigger Picture
I hate to break it to you doctors, but your issues with malpractice premiums don't even amount to a drop in the bucket of the overall problem. If all American doctors woke up tomorrow and found that the Good Actuarial Fairy was cutting their malpractice premiums to zero from now on, physicians would be very, very happy. But it would have no noticeable impact on the nation's health care crisis, because the cost of your malpractice insurance is less than one half of one percent of the nation's total health care expenditure, according to AIM.
Regarding "defensive medicine," I've covered this before, but here it goes again. Yes, physicians self-report that X amount of the tests and procedures they order are done "defensively," in case they are sued. But much empirical evidence suggests that physicians are kidding themselves. In the several states in which malpractice suits are drastically reduced, there has been no noticeable difference in the cost of practicing medicine. Costs continue to rise as much -- and more in some cases -- as in states that haven't been "reformed."
Tort reform advocates like to cite a 1996 study by Kessler and McClellan that in certain heart disease cases, there was a 5 to 7 percent increase in treatment costs in a high-litigation state compared to a low-litigation state. This is about the only independent study that shows an actual defensive medicine effect, as opposed to self-reported numbers. However, according to Tom Baker, (1) the data for this study dates from the 1980s; and (2) a second study published in 2002 showed that managed care erased most of the difference.
On Jan. 8, 2004 , the Congressional Budget Office also said the Kessler-McClellan study wasn’t a valid basis for projecting total costs of defensive medicine.
CBO: When CBO applied the methods used in the study of Medicare patients hospitalized for two types of heart disease to a broader set of ailments, it found no evidence that restrictions on tort liability reduce medical spending. Moreover, using a different set of data, CBO found no statistically significant difference in per capita health care spending between states with and without limits on malpractice torts.
At the time of this report, the nonpartisan CBO was headed by Douglas Holtz-Eakin, who previously was chief economist for President Bush's Council of Economic Advisers.
So, doctors, what say you? Are you still so certain you have to have tort reform?