THE BLOG
10/27/2014 10:20 am ET Updated Dec 27, 2014

How Tort 'Reform' Ruins Health Care for Everyone

Ebola-infected Thomas Eric Duncan was misdiagnosed in an emergency room and sent home in Texas, a state where patient safety deteriorated significantly when hospital emergency rooms were immunized for negligence. Beloved comedian Joan Rivers died during an office-based procedure in New York, where an extraordinary 12 percent of adverse events during such procedures result in death.

Medical negligence is suddenly on our national radar as we wonder, "How could these things happen?" Perhaps that question is something positive to come from these tragedies. It makes for perfect timing to talk about alarming new research by esteemed, longtime academics in the field of medical malpractice, who examined the impact of immunity laws, so-called "tort reform." The upshot of the new research is this: "Tort reform" laws harm not just injured patients and their families. They are also wrecking health care for the rest of us.

This recent research is found in three working studies focusing on perhaps the most controversial tort restriction: "caps on damages," which limit compensation to anyone wrongfully harmed by a hospital or doctor. Caps exist in about half the states, including Texas and California. The researchers took a look at states that enacted caps during the last "hard" insurance market (2002 to 2005) and then compared these data to other "control" states. In some cases, these data only recently became available, making it possible to look at these issues for the very first time. And here's what they found.

First, they found "consistent evidence that patient safety generally falls" after caps are enacted. Notably, this is the first study ever that evaluates the health consequences of any kind of "tort reform," and the results are extremely worrisome.

The researchers looked at Patient Safety Indicators (PSIs), considered the "standard measures of often preventable adverse events, developed by the Agency for Healthcare Research and Quality (AHRQ)." PSIs include such things as operative and post-operative errors, infections, birth-related errors and cases at risk, like hospital-acquired pneumonia. Their findings follow:

We find a gradual rise in rates for most PSIs after [caps were passed], consistent with a gradual relaxation of care, or failure to reinforce care standards over time.

The decline is widespread, and applies both to aspects of care that are relatively likely to lead to a malpractice suit (e.g., ... foreign body left in during surgery), and aspects that are unlikely to do so (e.g., ... central-line associated bloodstream infection).

The broad relaxation of care suggests that med mal liability provides "general deterrence" -- an incentive to be careful in general -- in addition to any "specific deterrence" it may provide for particular actions...

We find evidence that reduced risk of med mal litigation, due to state adoption of damage caps, leads to higher rates of preventable adverse patient safety events in hospitals.

The next study finds something equally shocking: "caps on damages" increase health care costs. Other studies have found that "tort reform" does not save as much money as expected, such as this new study from Rand and the New England Journal of Medicine, which the Washington Post headlined, "Study: Don't expect big health-care savings from medical malpractice reform."

This new research is completely different, finding an increase in health care costs once a state passes tort restrictions. Specifically, they found that "damage caps have no significant impact on Medicare Part A (hospital) spending, but lead to 4-5 percent higher Medicare Part B (physician) spending." [Emphasis in the original.] The reasons may have to do with physicians practicing riskier medicine in "cap" states, such as performing costly "high-risk services or procedures," which they avoid in states where the tort system's "general deterrence" function (noted above) works properly. The authors say:

Damage caps have long been seen by health policy researchers and policymakers as a way to control healthcare costs. We find, in contrast, no evidence that adoption of damage caps or other changes in med mal risk will reduce healthcare spending. Instead, we find evidence that states which adopted [caps] during the third wave of med mal reforms have higher post-cap Medicare Part B spending....

[O]ne policy conclusion is straightforward: There is no evidence that limiting med mal lawsuits will bend the healthcare cost curve, except perhaps in the wrong direction. Policymakers seeking a way to address rising healthcare spending should look elsewhere.

The third study finds that when a state passes caps, the only kinds of doctors it seems to attract are plastic surgeons. They say there is "no evidence that cap adoption predicts an increase in total patient care physicians, in specialties that face high med mal risk (except plastic surgeons), or in rural physicians." Specifically:

[W]e find no evidence that the adoption of damage caps increased physician supply in nine new-cap states, relative to twenty no-cap states...

Consistent with this analysis, we also find no association between med mal claim rates and physician supply in state and county fixed effects regressions over 1995-2011...

Physician supply does not seem elastic to med mal risk. Thus, the states that want to attract more physicians should look elsewhere.

These new studies represent a sea change in the way we look at "caps" on damages and so-called "tort reform." If you are living in a state with these laws, this new research should concern you greatly. If you live in California, for example, you must vote "Yes" on Prop. 46, which would allow that state's Draconian 39-year-old "cap" to keep up with inflation. While it would be preferable to get rid of the "cap" altogether, Prop. 46 is at least a step in the right direction.

But no matter where you live, you should find these results to be extremely troubling. These days, we must all be concerned about unsafe hospital care and understand, as a nation, that "tort reform" laws are making things worse for everyone.