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Can Health Reform Include Malpractice Reform?

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The House Republican alternative health care reform bill is now available. There is little new in it. It mainly recycles ideas like association health plans and interstate insurance sales that have been pushed for years. The bill is important, however, because it does highlight the issue of malpractice.

The bill contains a familiar package of malpractice reforms, relying primarily on limiting plaintiff’s recoveries or making it harder for plaintiffs to get legal representation. The CBO claims that the bill will reduce the deficit. It also claims that it will reduce insurance premiums for many Americans (although it will increase premiums for others). The primary cost savings in the bill are found in the malpractice restrictions. The CBO projects that these will save $41 billion over 10 years, primarily by reducing premiums. The House Democratic bill also mentions malpractice, but only offers incentives to the states to experiment with a more limited set of reforms, such as early-offer programs.

A discussion of malpractice reform should be part of our national health law reform discussion. We do in fact know a lot about it, as was demonstrated in the O’Neill Center’s malpractice symposium last month.

What I understand is that we know is this (correct me if I am wrong). Many Americans are victims of medical errors. Most of them do not sue. Some Americans who suffer bad medical outcomes that are not caused by negligence do sue. A few Americans file patently frivolous suits; not many. Physicians win most malpractice cases. Victims of malpractice who suffer the worst injuries tend to be undercompensated. They face a lifetime of high medical costs that are not always covered by their recoveries. Doctors hate medical malpractice litigation. They believe that they provide unnecessary care to keep from being sued. Defensive medicine does exist. There is little proof that it is a major factor in driving medical costs, a judgment that the CBO reaffirms in its evaluation of the Republican bill. Caps on malpractice judgments reduce premiums somewhat. They do so, however, by limiting recoveries by people whose primary injuries are noneconomic. If a baby is killed by malpractice, its parents have not suffered an economic loss. Have they suffered a loss? Caps also reduce malpractice costs by limiting the willingness of attorneys to take malpractice cases, which cost a great deal to litigate. In states with stringent caps it is hard to find an attorney who will bring a case, even involving egregious malpractice, unless economic loss is very high. Finally, a very high proportion of the premiums paid by health care professionals never get to injured persons, but are rather consumed by malpractice insurers and plaintiff and defense attorneys.

Our system is not working. We should replace it with a system that compensates more victims, minimizes claims for inuries not caused by error (or compensates them in other ways), and reduces administrative costs. Neither the Republican nor the Democratic bill does this. We can do better.

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  • Mark Hall says:

    I agree that malpractice deserves attention, but it’s also true that it’s received lots of attention already — some might say more than it deserves in proportion to other distressing flaws in health care finance and delivery.
    Malpractice reform could be addressed as part of the solution, or simply a bargaining chip, or some of both. But, what I find truly remarkable is how reform is progressing toward enactment with hardly a word about malpractice at all. In the past, you could always count on the AMA, for instance, to line up behind the bill that had the most malpractice protection. This time, they’re on board without any such professional “pork.” I think that’s admirable progress that should be congratulated.
    So, let’s fix health insurance first, and then turn to malpractice insurance later.

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