The Health Care Bill and Bringing Down Health-Care Costs

A goal shared by everyone in Congress is making healthcare more affordable for Americans. So why hasn’t there been more support for medical liability reform, which is a popular, cost-free measure that would unquestionably yield significant savings for patients and doctors?

Former Vermont governor and national Democratic Party chairman Howard Dean provided the most honest answer to this question at an August town hall meeting in Virginia. He said that medical liability reform has not been included in any of the Democrats’ bills because they don’t want to take on the trial lawyers.

Protecting trial lawyers should not be a goal of health-care reform. Their multi-million dollar “jackpot justice” lawsuits drive up the cost of health care for everyone and are a big reason health-care premiums have soared.

To help guard themselves from ruinous lawsuits, physicians must purchase expensive medical liability insurance – often at a cost of $200,000 or more for some specialists, such as obstetricians and anesthesiologists.

Because doctors pay for this insurance, patients ultimately do, too. Hudson Institute economist Diana Furchtgott-Roth estimates that 10 cents of every dollar paid for health care goes toward the cost of doctors’ medical liability insurance.

An even bigger cost related to the threat of lawsuits is doctors’ use of defensive medicine. The looming specter of lawsuits makes most doctors feel that they have no choice but to take extra – or defensive – precautions when treating patients.

A 2005 survey published in the Journal of the American Medical Association found that 92 percent of doctors said they had made unnecessary referrals or ordered unnecessary tests and procedures solely to shield themselves from medical liability litigation.

Sally Pipes, president of the Pacific Research Institute, has found that defensive medicine costs $214 billion per year. A new study conducted by PricewaterhouseCoopers reveals similar findings, pegging the annual cost at $239 billion.

Some states, like Arizona, have already implemented medical liability reform measures with positive results.

Dr. James Carland, president and CEO of MICA, Arizona’s largest medical liability insurer, wrote to me to describe some of the results he’s seen from Arizona’s medical liability laws – specifically from two statutes: one that reformed expert witness standards and another that imposed a requirement to inform the defendant, before trial, of expert witness testimony and allow the defendant to preview the substance of that testimony. According to Dr. Carland, these two statutes have reduced meritless medical malpractice suits in the state.

Indeed, medical liability suits have dropped by about 30 percent. Medical liability premiums have also fallen. Since 2006, MICA has reduced premiums and returned $90 million to its members in the form of policyholder dividends.

Texas has also had success with medical liability reform. It passed a series of measures in 2003, including limits on non-economic damages and a higher burden-of-proof requirement for emergency room negligence. The number of doctors practicing in Texas has skyrocketed, while costs have plummeted.

To reduce costs for both physicians and patients, Texas Senator John Cornyn and I have introduced legislation that would achieve medical liability reform by combining what has worked best in Texas and Arizona. We have taken the Texas stacked cap model for non-economic damages and coupled it with expert witness statutes proven to limit the filing of meritless lawsuits.

Despite the concrete evidence that medical liability reform would lower health-care costs for doctors, patients, and the government, none of the health-care bills being written by Congressional Democrats tackles the issue – in fact, they have rejected our attempts to amend their bills.

If we’re serious about making health care more affordable, we must have medical liability reform. Congress works for the American people, not the trial lawyers.

Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees.

Visit his website here or see him on his YouTube channel here.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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