Tort Reform Is Key To Health Reform – Pacific Research Institute

Tort Reform Is Key To Health Reform

Though common-sense Americans repeatedly raised the issue of tort reform while discussing health care legislation with members of Congress during town hall meetings this past summer, too many lawmakers and analysts still stubbornly insist that medical liability lawsuits do not contribute significantly to rising health care costs. These lawmakers and analysts are wrong.

A 2006 Harvard School of Public Health study found that four out of every 10 medical malpractice lawsuits filed in America each year are groundless, and that the “overhead costs of malpractice litigation are exorbitant.” These costs, of course, are imposed on doctors, hospitals and insurers, and then ultimately passed on to health care consumers.

Beyond the obvious costs of litigation, more subtle costs related to the practice of “defensive medicine” are contributing to runaway health care inflation.

How much? In a Massachusetts Medical Society survey published last November, 83 percent of Bay State physicians cited the fear of being sued in their decisions to practice defensive medicine.

According to the 900 doctors anonymously surveyed, on average, 18 percent to 28 percent of tests, procedures, referrals and consultations and 13 percent of hospitalizations were ordered to avoid lawsuits. All of this adds at least $1.4 billion to annual health care costs in Massachusetts alone, and national estimates range as high as $200 billion.

So, as Mississippi Governor Haley Barbour asks, “If we are trying to make health care more affordable, how can we leave out tort reform?”

Physicians Wanted

Another longer-term concern about leaving tort reform out of comprehensive health care legislation revolves around what is and will remain a growing need for more primary care physicians.

President Obama’s stated desire to emphasize preventive medicine as a means to lower overall health care costs will, with a growing and aging population, require a greater number of doctors. Yet the Association of American Medical Colleges predicts that the overall shortage of doctors practicing both primary care and high-risk specialties may grow to nearly 125,000 by 2025.

Surely medical schools will find it easier to persuade bright young men and women to pursue careers in medicine if the costly threat of medical liability lawsuits is reined in. The experience of states that have enacted tort reforms bears this out.

In an August column appearing in the San Francisco Examiner, Texas Governor Rick Perry wrote: “Just six years ago, Texas was mired in a health care crisis. Our doctors were leaving the state, or abandoning the profession entirely, because of frivolous lawsuits and the steadily increasing medical malpractice insurance premiums that resulted.”

But Texas has since joined 24 other states by enacting reforms that include a reasonable limit on non-economic damages for pain and suffering of up to $750,000 per incident. This essential reform does not limit compensatory awards for calculable lost wages and medical expenses, but it does balance the interests of patients and care providers while helping to ensure access to necessary care.

Now, according to Governor Perry, doctors’ insurance rates have declined by an average of 27 percent while the “number of doctors applying to practice medicine in Texas has skyrocketed by 57 percent. In . . . just the first five years after reforms passed, 14,498 doctors either returned to practice in Texas or began practicing here for the first time.”

Clearly then, President Obama should reconsider his opposition to limiting non-economic damages in medical liability litigation. The President and Congress should also consider additional liability reforms, such as health courts, administrative compensation programs, “early offers” and “safe harbors” for physicians who practice in compliance with evidenced-based clinical guidelines.

Reduce Groundless Lawsuits and Medical Errors

But the powerful personal injury bar, which exerts extraordinary influence at both ends of Pennsylvania Avenue here in Washington, as well as most state capitals, is determined to keep liability reforms out of pending health care legislation by trying desperately to change the subject.

Willfully ignoring the Harvard study mentioned above and several more recent analyses of litigation’s impact on health care costs by the Congressional Budget Office, the Manhattan Institute and the Pacific Research Institute, litigation industry lobbyists would now rather have us focus on a flawed 10-year-old study that misdirects the debate away from costly lawsuits and toward an alleged “epidemic” of medical errors. As though anyone supports shoddy medicine and medical errors.

The truth is that, with the exception of notable reductions within the field of anesthesiology, medical error rates in the U.S. haven’t changed substantively for many decades. And though we should never be complacent about medical errors, it’s reasonable to conclude that, as long as medicine is practiced by imperfect human beings, we’ll never eliminate them altogether – regardless of how many groundless lawsuits trial lawyers impose on our health care system.

Interestingly enough, tort reform advocates are perfectly willing to stipulate that medical errors and even negligence do occasionally result in patient injuries and that the law should work to minimize those errors while promptly and fairly compensating the injured. So why aren’t trial lawyers willing to stipulate that groundless lawsuits occur and that the law should work to minimize such lawsuits and their obvious and unnecessary costs?

Stubbornly self-interested personal injury lawyers respond by insisting that their litigation has practically no impact on health costs. But their argument defies common sense, especially in light of a related issue they would rather none of us discuss.

Drugs, Medical Devices and Technologies

An even more significant means to slowing the growth of health care spending would be to rein in speculative state lawsuits that often unfairly target the makers of federally regulated prescription drugs and medical devices and technologies.

Virtually every health care economist agrees that the costs of these lifesaving and life-enhancing products have been among the biggest drivers of overall U.S. health care costs during the past few decades. And litigation that too often accrues primarily to the benefit of trial lawyers has, in turn, helped drive those costs, all of which are ultimately passed on to patients.

Mass torts and class-action lawsuits, which by virtue of their size alone pressure defendants into expensive settlements, can include tens or hundreds of thousands of plaintiffs, with only a tiny fraction of them alleging an actual injury. But rather than consider legislation that would require all plaintiffs to demonstrate such injuries, for example, Congress is instead looking, incredibly, to overturn an 8-1 Supreme Court decision ( Riegel v. Medtronic , 2008) with the Medical Device Safety Act, which would further increase manufacturers’ liability and consumers’ costs.

President Obama has more than once quipped that his administration can “walk and chew gum at the same time” – and surely it and the Congress can. So why can’t thoughtful health care legislation reduce both the rate of medical errors and groundless lawsuits?

The obvious answer is that reasonable, bipartisan health care reform can and should do both. By reducing the number of groundless lawsuits against health care providers and the makers of life-saving products, health care spending could be reduced by at least several hundred billion dollars each year. Even in Washington, that’s still considered a lot of money – money that would go a long way in providing health insurance coverage for those without it.

Thus if comprehensive health care reforms are to succeed, they must include meaningful medical liability reform. Certainly real victims of negligence must be fairly compensated, but public policy must discourage litigation that abuses our civil justice system and makes health care less accessible and more expensive.

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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