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The Tort Reform Carrot

28 Sep

I got into a rather rancorous debate with a clinician recently who was trying to convince me–unsuccessfully–that tort reform was the key to fixing the health care system. Cap malpractice awards and premiums, and doctors would stop practicing defensive medicine, exiting high-risk specialties, and exiting the field of medicine altogether.

In hopes of putting an end to our back-and-forth, I wrote a short piece exploring the continued high costs of health care in Texas. Costs increased in the state despite the passage of some rather substantial tort reform legislation. Still, the perception that tort reform would bring health care costs under control seems especially widespread.

The problem is that it’s just not true. That physicians hate malpractice isn’t hard to understand. They end up paying a large sum in insurance premiums every year, and they continue to practice with the threat of a large lawsuit looming over their heads. Under such conditions, practicing defensive medicine, the “CYA” strategy makes obvious sense. But there’s more to it than just the threat of being sued.

Doctors get paid on the basis of how much they do, rather than how well what they do works. So, if you take away (or minimize) the lawsuit threat, doctors still have an incentive to provide a large volume of services. In fact, there may be a great deal of practice-based inertia regarding service volume. That is, doctors may well be in the habit of providing a great many services, a habit that–even if born of defensive medicine–would remain financially lucrative in post-tort-reform world.

Consider that malpractice premiums and awards represent at most 2% of national health expenditures, as Catherine Arnst reports, and you’re not looking at generating much savings from tort reform. That doesn’t mean we shouldn’t be considering tort reform–I think we should–but it does mean that we need to seriously temper our expectations. Tort reform alone has very little potential to reduce health care spending, and that’s a widely studied fact.

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1 Comment

Posted by on September 28, 2009 in Uncategorized

 

One response to “The Tort Reform Carrot

  1. Hamster

    October 10, 2009 at 7:11 am

    Many of us have always believed that greed is one of the factors that make our healthcare system the most expensive in the world.. Government has a place in keeping businesses…lawyers, drug companies, doctors, insurance companies…from making excessive profits off of people who can least afford it.Even Republicans are starting to get behind the concept that government intervention on behalf of consumers is not only necessary…it is also good.If we can put arbitrary caps on jury awards, we can put those same caps on the profits that drug companies, hospitals, doctors and insurance companies make.Tort reform in itself will only save our 2 trillion dollar a year healthcare system about 0.5%In itself…not a significant amount. But if you take the concept further and start putting caps not only on lawyers, but doctors, hospitals , insurance companies and drug companies…now you are talking real savings.Government limits to jury awards. Yes.Government limits to doctors fees. YesGovernment limits to drug companies profits. YesGovernment limits to insurance companies profits. YesNow we are all talking the same language

     

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