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An Empty Nod to Tort Reform

Thursday, September 24, 2009

In an apparent attempt to sway at least one undecided Republican senator to sign on to its healthcare reform program, the Obama administration announced the initiation of a ‘pilot program’ on tort reform.

In an apparent attempt to sway at least one undecided Republican senator to sign on to his healthcare reform program, the Obama administration has announced the initiation of a "pilot program" on tort reform, which the president alluded to in his recent speech to a joint session of Congress.

The program is not serious. The money provided to states in the program—up to $3 million per state, spread over three years—is peanuts in the context of a trillion dollar healthcare reform proposal.

Besides, there are already several large "pilot projects," namely, more than 20 states, including Texas, Missouri, and Illinois, where the enactment of tort reform (in the form of caps on awards for non-economic damages such as pain and suffering) has led to declines in insurance costs and medical expenditures for so-called "defensive medicine."

The costs of defensive medicine have been reliably estimated to range from $80 billion to $200 billion annually. The president put the cost of his reform program at approximately $100 billion annually.

In his recent address to Congress, President Obama admitted that defensive medicine "may be contributing to unnecessary costs." Tests and even procedures are done to protect the doctor from looking negligent in possible future litigation, even though those practices do little to improve patient health. The costs of defensive medicine have been reliably estimated to range from $80 billion to $200 billion annually. That is a lot of money, even today. The president put the cost of his reform program at approximately $100 billion annually over the next decade. Offsetting those costs by reducing the threat of frivolous litigation could have been a substantial element of his total package—if he were genuinely interested.

The savings to the healthcare system from tort reform would certainly dwarf those from the worthwhile, but costly, efforts to improve preventive measures. How else is the new health paradigm to be funded? Supposedly by eliminating fraud and waste, as well as better coordination, such as using electronic records. But even the president's supporters acknowledge that the actual cost savings from these efficiencies would be incremental at best.

The money provided to states in the administration’s pilot program on tort reform is peanuts in the context of a trillion dollar healthcare reform proposal.

Our current tort system is not only expensive but reduces access to providers. Doctors have been voting with their feet, by moving in significant numbers from no-cap states to states with award caps. In fact, it can be quite a struggle for a new patient to find an ob-gyn or orthopedist (among other high-premium, high-risk specialties) in states with no caps on non-economic damage awards.

Ideally, the tort system could eventually be moved to state courts designated as special malpractice panels, using as models the workers compensation and vaccine injury courts, with required funding for compensating injured patients coming from interested parties on a no-fault basis.

The current system mainly rewards trial lawyers, not injured patients, and is a major drag on our public health resources. Most injured patients do not sue—even if negligence was the cause—and most patients who do sue get nothing. Clever, persuasive lawyers use the system as a lottery, knowing that a piteous patient-plaintiff can become a windfall whether actually maltreated or not. Reasonable caps on non-economic awards would have a chilling effect on such frivolous litigation and squeeze huge savings out of the system, to the benefit of all.

Dr. Gilbert Ross is the medical director of the American Council on Science and Health.

FURTHER READING: Ted Frank discussed how tort reform could boost the economy in “A Stimulus You Can Believe In.” In “Maybe We Should Spend More on Healthcare,” James DeLong included tort reform in his cost-cutting suggestions. Mark Crane tells why special tribunals could be the answer to our medical malpractice mess in “Give Health Courts a Fair Shake.”

Image by Darren Wamboldt/Bergman Group.

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