Tort Reform is a Red Herring, Not a Silver Bullet

Attempting bipartisan outreach, the president said last night he would consider tort reform as part of a general health care overhaul. Pledging to initiate pilot programs aimed at reducing "defensive medicine," Obama added the caveat: "I don't believe malpractice reform is a silver bullet." I would go further: tort reform is a giant red herring.

There is simply no way that damage caps could ever produce the billions of dollars in savings that proponents claim. In 2005, the Congressional Budget Office determined that, at most, tort liability accounted for less than 0.5% of health care costs, and probably far less than that.

Indeed, once you add up the cost of all the lawsuits in America, the percentage of GDP swallowed up by torts actually dropped nearly 10% between 1986 and 2004. It's nonsense to think that lawsuits explain the double-digit rise of health care costs over the last ten years.

Consider the now-famous example of McAllen, Texas. Highlighted in a New Yorker article this June, McAllen physicians enjoy the toughest tort reform laws in the country, yet the area remains one of the most expensive places in America to be sick. Writer Dr. Atul Gawande relates the following exchange:

"It's malpractice," a family physician who had practiced here for thirty-three years said. "McAllen is legal hell," the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere.

That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn't lawsuits go down? "Practically to zero," the cardiologist admitted.

"Come on," the general surgeon finally said. "We all know these arguments are bullshit. There is overutilization here, pure and simple." Doctors, he said, were racking up charges with extra tests, services, and procedures.

Writing at Salon.com three years ago, Ezra Klein examined a RAND study on the growth of malpractice awards from 1960 to 1999:

"Our results are striking," the research team concluded. "Not only do we show that real average awards have grown by less than real income over the 40 years in our sample, we also find that essentially all of this growth can be explained by changes in observable case characteristics and claimed economic losses." (Emphasis mine)

Nor is it correct to say that torts alone are responsible for the rising cost of malpractice insurance. In state after state after state, there is simply no correlation: as the number of cases goes down, premiums continue to rise. Indeed, the only proven correlation with tort reform is increased profitability for insurers.

Mind you, doctors are required by law to carry malpractice insurance; because they are wealthy, and the insurance companies are profit-driven, a far more likely explanation for the high premium increases over the last decade is that doctors are just getting screwed. Given the way health insurance premiums have skyrocketed in the same time frame, it's a logical explanation.

Nor are malpractice suits as common as we're led to believe: very few malpractice victims actually sue their doctors. Frivolous suits are far more rare than advertised, as judges throw most of them out of court. It's incorrect to say that juries are the problem, either, since malpractice suits are much more likely to go against the plaintiff.

Nevertheless, when the jury does find for the plaintiff, the awards tend to be much higher. That fact tells you the real culprits in malpractice cases are bad doctors.

In fact, studies have found more than 100,000 Americans die every year from bad medicine. The Journal of the American Medical Association lists it as the third-leading cause of death in the United States (warning: registration required). Yet a very small number of physicians is responsible for an outsized number of these cases. This really is a "bad apples" problem, one that could be greatly improved by use of best-practices and better physician access to information. Ezra Klein offers an example:

Anesthesiologists used to get hit with the most malpractice lawsuits and some of the highest insurance premiums. Then in the late 1980s, the American Society of Anesthesiologists launched a project to analyze every claim ever brought against its members and develop new ways to reduce medical error. By 2002, the specialty had one of the highest safety ratings in the profession, and its average insurance premium plummeted to its 1985 level, bucking nationwide trends. (Emphasis mine)

I doubt Obama's outreach will garner any reciprocal attention from Republicans; they've been calling it "lip service" all day. They shouldn't act like this is a late turn, however, as Obama first broached the idea back in mid-June.

It's likely to be a popular idea as well. Trial lawyers are a widely-despised lobby. Yet courts remain the only way individual Americans can redress grievances against the rich and powerful; they are a great leveler, and limits have had perverse effects.

In Texas, for example, draconian "reforms" require minimum income and proof of future income to qualify for economic damage awards. The poor, stay-at-home mothers, children and the elderly rarely qualify. The state cap on non-economic damages makes these cases too expensive for lawyers to pursue. In effect, tort reform there has taken away one of the most important rights of American citizens.

Another instructive example is the military, where federal law removes all liability from medical doctors -- and the incentive to avoid mistakes. Tort reform could actually increase the rate of malpractice deaths.

Lastly, any federal tort reform act would undermine the role of state courts in deciding medical malpractice cases, rejecting two centuries of legal tradition in a dubious attempt to attract a few Republican votes. Tort reform is a red herring better left at sea.

Comments

[grandpopp]

There needs to be tort reform, alright, but not the kind the Republicans request. There needs to be reform in the manner in which lawyers bill and Corporations and the governments pay for defending tort lawsuits. Corporate and Government lawyers triple bill their willing clients and have done it for decades. Corporations and Governments don't care how much they are billed since the bills are paid by higher prices and increased taxes.
In the 1980's I represented employees who were being discriminated against by their employers. For five years I filed FOIA requests for the billings of "defense counsel" who were being paid by the Government to defend the governments privilege of discriminating against employees. Time after time, when I prevailed in my cases my client would receive, for example, $100,000 and I would receive an award of attorney's fees of approximately $30,000. NOW guess how much the Government was paying its attorneys for losing the cases: Between $300,000 and $1,000,000 dollars. When I filed these cases I would give opposing counsel my best estimate as to how much the case was worth and every time they would laugh at me and then start their double, triple billing and continue it for as long as they could. WANT to resolve the problem? Allow defense counsel to send ten or fifteen attorneys to the hearings if they want to go but audit plaintiff and defense counsel billings and limit payments to necessary and essential services. End of problem.

[Virgil Kane]

The premise of your article is completely wrong. You brush past the defensive medicine aspect of the subject. Doctors in this country waste so much time and energy ordering needless tests and procedures in fear of getting sued. That isn't getting into your 0.5% figure. All doctors practice defensive medicine. I'm married to a physician (resident) and she will get sued an average of 7 times/year even though she does nothing wrong. The legal department says this is just how it is. Often times people sue every doctor that saw them during their stay, nurses, and even medical students.

The hospital usually settles because it is more expensive to drag it out in court even if the doctors win. If tort reform dictated that the loser of the lawsuit payed then it would reduce the number of lawsuits only to the legitimate ones and weed out the ones filed by ambulance chasers. Of course the trail lawyers would hate this, but it would be better for the doctors and everyone else as it would bring costs down across the board.

Did you know medical malpractice insurance premiums can be as expensive as $84,000 per year? Average medical student has $200-$300K in debt after the graduate from medical school, doctors are not as rich as you think. Doctors get paid 40-50K/year as residents while working 80-100 hour weeks. Let's give them the respect they deserve.

[WestVillager]

To make rules about who can sue based on income seems unconstitutional. Forget Draco.

[S1m0n]

And as we've recently seen in the The Corporation ( http://www.thecorporation.com/ ) the behaviour of most large corporations fulfills all the diagnostic criteria of psychopathy.

Which is why tort reform is dangerous, and why this cause is being bankrolled and largely astro-turfed by some of the most powerful corporations in the world. A corporation is already nearly impossible to discipline. You can't fire one, put one in jail, or even go down to the office and horsewhip one. They're immune to all that. In fact, when a corporation does wrong, we have only one tool available to us to stop them: attacking the bottom line.

Which means lawsuits, fines, or boycotts. That's it. The folks backing this campaign are doing so because they'd like to cast off these last restraints.

[Kassandra]

Again, it's all BS. You can't sue a doctor without going before a panel made up of doctors and lawyers and getting "permission" to sue. Malpractice suits take on average two years to get to court.
I have been seriously injured by doctors and it's just too much trouble and anguish to try to sue them. They are getting more and more slipshod all the time because they know it's nearly impossible to sue them
But the insurance corporations still make them carry exorbitant malpractice coverage...another insurance scam and creating "tort reform won't take away the malpractice insurance anyway. More "protection rackets" on the part of the insurance giants.
Make the doctors take the Hippocratic Oath again and maybe they'll think more about the health of their patients and not so much about the moolah

[RRonin]

Part of the problem is that malpractice insurance is sold AT A PROFIT. Just like the health insurance that pays the medical bills. Health care will be ridiculously expensive so long as PROFIT is at it's center.

[WestVillager]

If we're generalizing, then suing your doctor should only be to remove bad practitioners, change law or for bragging rights. Removing the associated medical debt and personal profit must also go away. The solution is to let profit motivate the industry in a better direction.