The health-care bill the Senate Finance Committee approved makes a lot of promises. It will cost American taxpayers $829 billion, on top of an already out-of-control federal budget, as well as guarantee an increase in their individual medical expenditures.
But one thing the bill does not do is bring down the high cost of health care, which is driven in large measure by abusive tort litigation. This litigation greatly increases medical malpractice‑insurance costs and forces doctors to practice “defensive medicine” — that is, order unnecessary tests and treatments to avoid potential lawsuits.
When President Obama addressed Congress on health care, he actually mentioned medical-malpractice reform. But he made only a dubious offer of future medical-malpractice “pilot projects,” as if that would make the proposed government takeover of health care any more palatable.
The president said he doesn’t “believe malpractice reform is a silver bullet.” He claims he has talked to enough doctors to know that defensive medicine “may” be contributing to costs. “May” be contributing? The Journal of the American Medical Association found that 93 percent of doctors admit practicing defensive medicine. A new study by the Pacific Research Institute estimates that such practices cost $191 billion a year, while a separate study by PricewaterhouseCoopers puts the number even higher — $239 billion.
Medical-malpractice premiums have risen by more than 80 percent each year in some parts of the country and can cost almost half a million dollars a year in some specialties. The direct costs of medical-malpractice tort claims range from $16 billion according to the Pacific Research Institute to more than $30 billion according to Tillinghast-Towers Perrin. A CBO report requested by Sen. Orrin Hatch admitted that medical-malpractice reform could save $54 billion for the U.S. government alone.
President Obama professed interest in a “range of ideas about how to put patient safety first and let doctors focus on practicing medicine.” He ordered Secretary of Health and Human Services Kathleen Sebelius to move forward with “authorizing demonstration projects in individual states to test these issues.”
Test these issues? There’s no need for federal tests — we already know what works. States that have implemented medical-malpractice reforms, such as Texas and Mississippi, have seen significant decreases in malpractice premiums — a major medical cost for doctors that’s passed directly to patients — and substantial decreases in the number of malpractice claims filed by the plaintiffs’ bar.
Medical-malpractice reform clearly works. This isn’t primarily a federal issue, but federal health-care programs shouldn’t inflame the problem or prevent reform, which is what the pending federal legislation could do. As we described in a recent Heritage Foundation paper, an amendment to Medicare that was proposed for one of the House health-care bills would flood federal courts with speculative and abusive class-action lawsuits to benefit plaintiffs’ lawyers at the expense of the American taxpayer and Medicare beneficiaries. It would also override much of state tort law and state tort reform.
Moreover, the larger the share of the health-care system that is regulated by the federal government, the less freedom states will have to implement medical-malpractice reform. The pending legislation threatens to make a serious tort problem catastrophically worse.
Obama’s legal-reform rhetoric is an empty offer for other reasons as well. The president qualified his “offer” in an interview on 60 Minutes when he said he opposes caps on malpractice awards, a key component of successful reform. Second, no federal “demonstration” project intended to “test” this issue will likely change the medical-malpractice dynamics in states where trial lawyers control the legislative process. Only federal legislation that conditions federal funding for Medicaid or Medicare on states’ passing liability reform for providers in those federal programs could induce many states to implement them. Short of that, any federal action should encourage, or at least be consistent with, state medical-malpractice reform.