Misplaced Malpractice Reform

by Kiren Gopal

According to President Obama, health care reform should control costs, expand coverage, improve care, and guarantee choice.  As Congress works to find politically palatable solutions to achieve those goals and health care interests continue to lobby – to the tune of $1.4 million daily – some legislators instead choose to offer proposals to limit medical liability.

These proposals are based in part on the theory that frivolous malpractice claims are epidemic and represent a significant component of health care costs.  But according to the latest Public Citizen study of the National Practitioner Data Bank, nearly two-thirds of the individuals who were compensated in 2008 suffered an injury that resulted in “significant permanent injury, major permanent injury, quadriplegia, brain damage or the need for lifelong care, or death.” These claims can hardly be described as frivolous. Perhaps the most telling point from the NPDB study is that the medical malpractice liability system accounts for just 0.6 percent of national health care costs. Reducing accountability for medical malpractice is clearly an unsuitable focal point for reducing unnecessary costs. 

Groups like the American Medical Association and Common Good also contend that “defensive medicine,” where providers order unnecessary tests out of fear of lawsuits, also contributes to rising health care costs. But both the Congressional Budget Office and the National Bureau of Economic Research concluded that the effects of limiting tort liability on the practice of “defensive medicine” are “weak or inconclusive” and “at best ambiguous.” 

It is against this backdrop that some senators introduced amendments to restrict patients’ rights.  Senator Hatch’s amendment, for example, would impose an arbitrary cap on damages, leaving patients who suffer significant permanent injuries without adequate compensation.  But in the states, measures like this have not driven down costs.  A recent article in the New Yorker, examining health care costs in a small Texas town, observed that although Texas capped malpractice awards in 2003, today McAllen is the second most expensive health care market in the country. Further, consumers’ insurance premiums and Medicare spending in Texas have continued to rise even after caps on damages became law.

Although none of these amendments has been adopted, there is reason to be concerned.  For example, Senate Finance Committee Chair Max Baucus released a health care reform white paper last November which contained liability proposals in the form of administrative compensation tribunals.  These “alternatives” are more similar to caps on damages than they seem because they are likely to limit compensation and immunize negligent providers from accountability. Whether the chairman will allow such provisions in the health care legislation is a matter to which we should pay close attention.