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The Evidence is Clear: Med Mal 'Reform' Doesn’t Lower Health Care Costs

One of the most popular quick-fix cures touted for our ailing health care system is medical malpractice reform. Politicians like Rick Perry and Sarah Palin often point to Texas, which in 2003 imposed severe caps on non-economic damages. However, a recent report by the Congressional Budget Office (CBO) shows that even if the most far-reaching tort reform proposals were enacted, expected savings would amount to just one-half of one percent of total health care spending per year.

If patients' rights to compensation for pain and suffering were capped, punitive damages were limited, liability laws were modified and the statute of limitations was constricted, we would save about $11 billion a year, according to the nonpartisan agency. To put that number in perspective, Americans spend about that much each year on dog and cat food.

This figure is far lower than the claims made by advocates for medical malpractice reform. According to the Los Angeles Times, Sen. Jon Kyl of Ariz. recently claimed Americans would save "between $100 billion and $200 billion" if medical malpractice reforms were enacted.

The CBO's analysis is backed by a report from the General Accounting Office (GAO), which found that the potential savings from damage caps would not have a significant effect on the total costs of health care. The GAO asserted that a reduction of 25 to 30 percent in costs from medical malpractice litigation would lower health care costs by less than one-half of one percent.

"Defensive Medicine" Scrutinized

The CBO analysis also examined so-called "defensive medicine" procedures (extensive tests ordered by doctors to prevent mistakes and possible malpractice lawsuits). The agency found little evidence of the much-discussed phenomenon actually taking place.

To the extent that the agency did find evidence of "defensive medicine," it was mainly restricted to studies of Medicare. The agency found that if medical malpractice reform was enacted nationwide, the decrease in unnecessary "defensive medicine" would net three-tenths of one percent of health care costs.

The Opposite of What is Intended

The CBO report also suggests that limiting liability, a form of tort reform now on the books in over 40 states, has the opposite effect of what is intended. In other words, it raises health care costs rather than lowering them. The CBO states limiting liability "may increase the volume and intensity" of doctor services, raising costs for everyone.

A recent study by Americans for Insurance Reform shows that doctors in states that have enacted acute medical malpractice tort reforms have been subjected to the same insurance rate changes in medical malpractice premiums as those in states without these restrictions.

According to that study, the states with the highest liability insurance premium increases were among those with the most severe restrictions on patients' rights to compensation for preventable medical injuries: Florida, Nevada and Utah.

Diminished Quality of Care

The threat of medical malpractice litigation serves as a deterrent to doctors and hospitals who might otherwise provide substandard care. Removing this deterrent has negative effects on the quality of care American consumers receive from health care providers.

The landmark Harvard Medical Practice Study found that the "litigation system seems to protect many patients from being injured in the first place. And since prevention before the fact is generally preferable to compensation after the fact, the apparent injury prevention effect must be an important factor in the debate about the future of the malpractice litigation system."

A 2006 article in New England Journal of Medicine noted that malpractice litigation has motivated anesthesiologists over the past 25 years to improve their practice. The result has been a dramatic improvement in safety for patients: the risk of death from anesthesia dropped from 1 in 5,000 to about 1 in 250,000.

How has tort "reform" improved access to health care in Texas?

Texas leads the nation with 25 percent of its residents uninsured. It ranks 46th in the Commonwealth Fund's scorecard of state health care performance, 43rd in prevention and treatment, 48th in physicians per capita and 42nd in avoidable hospital use and costs. Finally, it ranks dead last, at 51, in access to medical care.

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