Tort Reform Does Not Equal Health Care Reform
Politicians, news media, and commentators have been full of rhetoric about the health care debate. And “tort reform!” has been the mantra of those whose agenda appears to be to derail the process of health care reform. The facts clearly show that medical malpractice tort reform would have no beneficial effect on the health care system.
First, tort reform would not result in meaningful cost savings to the health care system. Monetary payouts for medical malpractice cases and claims are less than one percent of total U.S. health care costs. All verdicts, settlements, and legal fees, combined have stayed below one percent for the last 18 years. Medical malpractice insurance premiums are also less than one percent of total U.S. health care costs and have been dropping for the past two decades. Americans for Insurance Reform, “Think Malpractice is Driving Up Health Care Costs? Think Again,” http://www.insurance-reform.org/pr/ AIRhealthcosts.pdf. The findings of the Congressional Budget Office (CBO) agree: “Malpractice costs account for less than 2 percent of [health care] spending.” Congressional Budget Office, Limiting Tort Liability for Medical Malpractice 1, 6 (Jan. 8, 2004). The CBO report further found that “even a reduction of 25 percent to 30 percent in malpractice costs would lower health care costs by only about 0.4 percent to 0.5 percent, and the likely effect on health insurance premiums would be comparably small.” Id. The elimination of all medical malpractice claims would result in a miniscule amount of cost savings. How can tort reform advocates seriously argue that small amount would make any significant difference to the health care system?
Second, the common claim that defensive medicine costs $200 Billion a year is false. In fact, the CBO report cited above states, “On the basis of existing studies and its own research, CBO believes that savings from reducing defensive medicine would be very small.” Other researchers agree: “The fact that we see very little evidence of widespread physician exodus or dramatic increases in the use of defensive medicine in response to increases in state malpractice premiums places the more dire predictions of malpractice alarmists in doubt.” Katherine Baicker and Amitabh Chandra, The Effect of Malpractice Liability on the Delivery of Health Care, National Bureau of Economic Research, Working Paper, 10709, 2004. Additionally, the research shows the defensive medicine that is practiced is linked to increasing income rather than fear of liability. Medical Malpractice: Implications of Rising Premiums on Access to Health Care, Government Accountability Office, September 29, 2003, www.gao.gov/cgi- bin/getrpt?GAO-03-836. The truth is that defensive medicine is not a big problem; it has more to do with patient safety concerns and income generation than fear of mounting medical malpractice claims.2
At the time of writing this article, the House of Representatives’ Bill on national health care reform is being debated in the Senate. The bill would provide health insurance to over 30 million more people, outlaw denial of health coverage based on pre-existing conditions and gender, and eliminate price-gouging by health insurers. Hopefully, our lawmakers will focus on the facts and the dream of health care for all will be realized – but without tort reform.