Why Link Medical Malpractice Reform With Healthcare Reform? Does not make sense.
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For the past few months, the one public policy that has been on every American's mind is health care reform. It seems like everyone has their own, unique opinion on the state of our country's health care system and how to best reform it, if reform is even necessary.
If you even begin to do some research on the subject, though, you find that there are a lot of red herrings in the health care debate, and it is very easy to be swayed by biased information that serves a particular interest group.
Take, for instance, the argument for litigation reform. Many doctors and insurance companies claim that the rising health care costs in America are caused by rampant medical malpractice claims by people who want to "get rich quick" off of the medical system, and by the subsequent need for doctors to perform "defensive medicine", wherein they perform unnecessary tests to cover themselves in case their patient decides to sue them for negligence. If we were to believe the people who support caps on awards in malpractice cases, all we would have to do to ensure quality, affordable universal health care is stop rewarding the countless individuals who rob the medical system of millions of dollars in rewards for petty injuries. Stories like the McDonald's customer who spilled coffee on her lap and supposedly won rewards of $2.7 million do not help the case that malpractice reform is a red herring in the health care debate. (It is worth knowing that the case of Liebeck vs. McDonald's is a bit more complicated than the story known by most people, and the woman's rewards were not as ridiculous as many have made them seem and in fact she ended up with very little money despite that the McDonald's store that she sued had several earlier similar instances of burning coffee which had caused injuries to customers).
So, is medical malpractice reform the solution to our health care problem? Not according to several prominent economists. Take, for instance, the opinion of Amitabh Chandra, a well-respected Harvard economist:
“Medical malpractice dollars are a red herring,” Chandra said in a telephone interview. “No serious economist thinks that saving money in med mal is the way to improve productivity in the system. There’s so many other sources of inefficiency.”
The results of a study by the U.S. Department of Health and Human Services show that medical malpractice cases make up only 2% of the country's health care spending, and "defensive medicine" only accounts for 5-9%. These numbers hardly reflect a significant source of spending in our health care system.
Proving this point even further, the Congressional Budget Office has concluded that even if states were to lower malpractice costs by 25-30%, health care costs would only be lowered about 0.4%, and there would be an equally negligible effect on health care insurance premiums.
The real cost of health care is outlined very clearly on the Henry J. Kaiser Foundation website, which finds the causes of rising health care to be:
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Prescription drugs and technology – Spending on prescription drugs and new medical technologies has been cited as the primary contributor to the increase in overall health spending. Some analysts state that the availability of more expensive, state-of-the-art drugs and technological services fuels health care spending not only because the development costs of these products must be recouped by industry but also because they generate consumer demand for more intense, costly services even if they are not necessarily cost-effective.
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Chronic disease – The nature of health care in the U.S. has changed dramatically over the past century with longer life spans and greater prevalence of chronic illnesses. This has placed tremendous demands on the health care system, particularly an increased need for treatment of ongoing illnesses and long-term care services such as nursing homes; it is estimated that health care costs for chronic disease treatment account for over 75% of national health expenditures.
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Aging of the population – Health expenses rise with age and as the baby boomers are now in their middle years, some say that caring for this growing population has raised costs. This trend will continue as the baby boomers will begin qualifying for Medicare in 2011 and many of the costs are shifted to the public sector. However, experts agree that aging of the population contributes minimally to the high growth rate of health care spending.
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Administrative costs – It is estimated that at least 7% of health care expenditures are for administrative costs (e.g. marketing, billing) and this portion is much lower in the Medicare program (<2%), which is operated by the federal government. Some argue that the mixed public-private system creates overhead costs and large profits that are fueling health care spending.
The facts are clear: medical malpractice claims are not a significant contributor to rising health care costs, and capping rewards in malpractice cases would not make health care more affordable. They make up less than 1% of total health care costs. 1%! If anything, capping rewards for malpractice cases is dangerous, because it means that doctors are held less accountable for their mistakes, and that patients who need compensation for wrongful pain, injury, or death will not be able to receive the justice they are due. It also means that the states supplement the medical care and treatment of the terribly injured person who cannot afford their ongoing care. What caps mean s we pay for doctor's negligence while insurance companies collecting premiums are given a pass. How does this make sense to anyone? If it doesn't make sense to you, I would hope you stay away from linking tort reform with any discussion on health care reform.