03/18/2010 05:12 am ET Updated May 25, 2011

Tort Reform Does Not Reduce Health Care Costs--Never Has, Never Will

On October 9, 2009, the Congressional Budget Office's (CBO) Doug Elmendorf wrote a letter to Senator Hatch (R-UT) on the "effects of proposals to limit costs related to medical malpractice ('tort reform')", and concluded that tort reform could decrease health care costs. Elmendorf went on to say, "Tort reform could affect costs for health care both directly and indirectly" by lowering premiums for medical liability insurance and indirectly by reducing so-called "defensive medicine," e.g., ordering unneeded tests and procedures, all in order to avoid completely being made a defendant in a medical malpractice lawsuit. Thereafter, those opposing robust health care reform, including those running for a higher office such as U.S. Rep. Mark Steven Kirk of Illinois (R), have hoisted the flag of medical liability reform as a badge of their courage in order to defeat what has (now) passed in the House and will surely be debated vigorously in the Senate. How misguided they all are.

Tort reform never has, and never will, reduce health care costs. Let me repeat this: tort reform never has, and never will, reduce health care costs. While not a member of any trial bar organization nor an attorney representing those who sue doctors and hospitals, I have been a health care attorney for some thirty-seven years. In this time, I have also served for five years as chair of the American Bar Association's (ABA) Standing Committee on Medical Professional Liability. Certainly here, I do not speak in any manner for them nor represent their declared views, or for any organization to which I belong for that matter, but the argument that tort reform will reduce health care costs is a specious one. In fact, the ABA, representing some 400,000 lawyers across all walks of legal life, sent a letter to Director Elmendorf earlier this month, taking considerable issue with the contents of Elmendorf's October 9 letter and the research upon which he claims to rely.

Over the years, Elmendorf's CBO has admitted that tort reform has had what is tantamount to a negligible effect on reducing health care costs for the nation's population, and that defensive medicine is done more to increase revenues for those in the private practice than anything else. The latest figure he uses is $54 billion as a cost savings.

The guts of any tort reform over the last 35 years has taken the face of capping non-economic damages, typically for pain and suffering awards. The first state to do this was California in the mid-1970s with its law called "MICRA." But costs for health care did not go down because of it. Neither did insurance premiums for doctors until the California insurance commissioner was given authority to review and approve premium rates. Likewise, many states have legislatively placed caps on pain and suffering awards over the years; others have not. Yet, in those states with caps, health care costs continue to rise; in states that do not, health care costs have continued to rise too. Similarly, there is no lock step between caps and the reduction of insurance premiums. It is true, however, that in states with caps, there exists a reduction of medical malpractice lawsuits, because the economics of pursuing a worthy case diminishes considerably if a ceiling is placed on any potential recovery for an injured patient.

Moreover, having studied over decades the phenomenon of doctors' insurance rates in relation to medical malpractice tort reform, it is true that there have been spikes in these rates over relatively short periods of time once or twice each decade since the 1960s. During these times, or shortly before them, the performance in the financial markets turned downward, as if to suggest that the return on premium dollars invested by the insurance industry soured, and the only way to make up for lost revenue was to increase premiums. Professional liability policies for doctors became a great target.

Second, defensive medicine is a misnomer. Keep in mind that in many states before a lawsuit can be filed, a doctor has to provide some sort of document that basically says the proposed lawsuit has merit enough to be filed. Then, a lawyer needs another medical expert or two to support the case once filed in order to either settle it, or to have a jury decide there was a standard of care that was breached, resulting in damages. Physicians who say they practice defensive medicine in order to escape being at the end of a lawsuit should first question their medical colleagues about who makes it possible for so many lawsuits to be filed and to be litigated against doctors and other health care providers. What comes to mind is the thought, "(S)he who lives in glass houses should not throw stones." Thus, if defensive medicine is practiced, it is done to exceed standards of care that the medical community itself sets up. How, then, can there be a reason (other than to generate income) for ordering extra tests and procedures that cost billions of dollars when those doing the ordering know that the standards of care set by their own profession do not require them to be ordered and undertaken in the first instance?

In the end, for anyone opposed to robust health care reform because it fails to include medical liability reform needs to examine their premise. What we should be more concerned with is patient safety; to ensure the safety of patients is where billions of dollars can, and will, be saved.

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