Alex Nussbaum of Bloomberg had a great article about health care spending and the lack of need for tort reform. Some highlights from the article are below:
Annual jury awards and legal settlements involving doctors amounts to “a drop in the bucket” in a country that spends $2.3 trillion annually on health care, said Amitabh Chandra, a Harvard University economist. Chandra estimated the cost at $12 per person in the U.S., or about $3.6 billion, in a 2005 study. Insurer WellPoint Inc. said last month that liability wasn’t driving premiums.
“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.”
About 10 percent of the cost of medical services is linked to malpractice lawsuits and more intensive diagnostic testing due to defensive medicine, according to a January 2006 report prepared by PricewaterhouseCoopers LLP for the insurers’ group America’s Health Insurance Plans. The figures were taken from a March 2003 study by the U.S. Department of Health and Human Services that estimated the direct cost of medical malpractice was 2 percent of the nation’s health-care spending and said "defensive" medical practices accounted for 5 percent to 9 percent of the overall expense.
A 2004 report by the Congressional Budget Office also pegged medical malpractice costs at 2 percent of U.S. health spending and “even significant reductions” would do little to reduce the growth of health-care expenses.
The proportion of medical malpractice verdicts among the top jury awards in the U.S. has declined during the past 20 years, according to data compiled by Bloomberg. Of the top 25 awards so far this year, only one was a malpractice case. At least 30 states cap damages in medical suits, primarily for “pain and suffering” awards.
The development of new drugs and medical procedures, and their growth in price, has been a bigger factor in costs, said Chandra, citing his research and that of other economists. Studies haven’t found a link between increasing procedures, such as Caesarian-section births, and areas with rising malpractice damages, he said.
Medical malpractice is “not a major driver” of spending trends in recent years, Indianapolis-based WellPoint, the largest U.S. insurer by enrollment, said in May 27 report. The report cited advances in medical technology, increasing regulation and rising obesity as more significant reasons for rising costs.
The U.S. Institute of Medicine found a decade ago that medical errors kill 98,000 Americans a year, said Les Weisbrod, president of the lawyers’ association. “By taking away the rights of people to hold wrongdoers accountable, the quality of health care will suffer tremendously,” he said.