Malpractice reform could reduce defensive medicine cost

An attendee holds up a sign a town hall meeting on Health Care at  Fork Union, Va.
 (AP Photo/Steve Helber)

Medical tort reform important.

Reform of the system through which patients sue doctors over alleged malpractice is a critical flashpoint in the ongoing debate over health care reform. Despite the passion displayed in town meetings, malpractice actions and insurance premiums are a very small part of the overall America’s medical expense.

According to an online story from the New York Times, 2007 medical tort expenses were $30.4 billion in 2007. Total medical costs for that year were a little north of $2.3 trillion. “That’s a rounding error,” said University of Pennsylvania Law Professor and Health Sciences expert Tom Baker. Even including malpractice premiums, “that accounts for .5 percent to 1.5 percent of total expense,” Baker continued.

Baker’s opinion tracks with that of other respected experts in the field including Dr. Tim Garson, a former George W. Bush administration health policy advisor and former Dean of the University of Virginia Medical School.

Why then is medical tort reform such a big deal?

The answer lies in the minds of physicians across the country. Although 96 percent of malpractice lawsuits settle prior to trial, they remain a huge fear for medical professionals. Doctors react by practicing “defensive medicine.” Physicians order repetitive, expensive procedures against the possibility they may someday be called upon to justify their standard of care in a legal proceding.

Defensive medicine costs an estimated 9 percent of total medical expenses. In order words, concerns over $30 billion in possible legal exposure costs the nation $230 billion a year in unnecessary expenditures.

To be fair, one never knows when a runaway jury might force an individual doctor into bankruptcy. Docs have a reason to be concerned. But overall, this rightful concern has ballooned into the classic story of a short tail that wags a whole big dog, or in this case a whole kennel-full of dogs (us).

Put another way, solving this one concern for the doctors will pay the entire ten-year $1 trillion cost of the House Democrat supported health reform bill (H.R. 3200) 2.3 times over without any other changes to our current healthcare system.

Constitutional challenges?

One difficulty with federal restrictions on medical tort reform may be that torts of this kind have traditionally been litigated on the state level. Some states have already taken action to reform their own codes. Tort reforms do significantly affect malpractice insurance premiums.

The 2008 Medical Liability Monitor reported in "American Medical News" showed unbelievable variances for doctors practicing the same kind of medicine in different states. Internists in Florida paid average malpractice insurance premiums of $54,710, while internists in Minnesota paid only $3,375 for similar coverage. General surgeons in Michigan paid $143,445 while their colleagues in South Dakota paid only $12,569. Obstetricians in New York paid insurance premiums of $194,935 while Ob-Gyns in Wisconsin paid only $18,154.

Federal action would significantly impact these differences by imposing national standards across the board at the cost of usurping what has been a state prerogative. It would certainly level the paying field for all doctors and patients, but it might have the undesirable effect of raising expenses for some physicians located in low premium areas.

Following a period where Malpractice Insurance companies raised rates aggressively to counterbalance some poor investment choices, medical malpractice premiums have been stable or declining for the past four or five years.

Complaints made during the Congressional summer recess at Town Hall meetings that Federal interference in health care is unconstitutional would need to be set aside if medical malpractice reform is addressed at all. With $2.3 trillion in savings at stake over ten years by eliminating defensive medicine, it would seem worth looking at.

Next: What reforms would be needed to fix malpractice torts and defensive medicine?

As America searches for solutions leading to a reformation of its own health care system, knowing the successes and shortcomings of health care regimes in other developed nations will be essential in negotiating the most palatable and efficient design for all concerned. This series attempts to connect the dots and explode the talking points in hopes that the folks who actually have a vote might come to a conclusion.

Al Portner is a former daily newspaper editor and publisher in seven states and author of the forthcoming “Mark Twain and the Tale of Grant’s Memoir.” Portner is also the proprietor of The Assignment Desk, LLC and provides writers, editors, and photographers for numerous kinds of contract projects from proposals and speeches to public relations and journalism. Reach him at alanportner@gmail.com.

For more info: 
New York Times interview on tort reform
Medical Liability Monitor
Medical liability costs and the practice of Medicare