October 20, 2009
By Edwin Meese III and Hans A. von Spakovsky
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
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
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.
Moreover, this offer is particularly ironic -- rather like
putting the fox in charge of the henhouse -- given that the cabinet
secretary tasked with implementing this proposal for demonstration
projects is Kathleen Sebelius. Before she was governor of Kansas
and the insurance commissioner of Kansas, she spent eight years as
the head of the Kansas Trial Lawyers Association, now the Kansas
"Association for Justice."
The KAJ's militant opposition to reform is highlighted on its
website. Unlike the vast majority of Americans, the KAJ doesn't
believe there's a litigation crisis. It denies that the plaintiffs'
bar files frivolous lawsuits. In its view, all businesses,
health-care providers, and insurance companies that are sued are
villains, out to cheat, injure, and steal from consumers -- a view
that's clearly shared by the White House and other Democratic
leaders, given their recent attacks on the insurance industry for
daring to question the high cost imposed by the Baucus bill. Of
course, Sebelius is also the state executive who, according to the
New York Times, "failed to make significant improvement in
health coverage or costs during her two terms as governor."
Despite what the president says, nothing in any of the
health-care bills floating around Congress, including the Baucus
bill, would implement any real tort reform. And other bills, such
as the misnamed Medical Device Safety Act, would make the situation
far worse. The MDSA would gut the carefully crafted regulation of
medical devices by the FDA and expose manufacturers to the
conflicting laws, regulations, and juries of 50 states,
substantially raising the costs of life-saving medical devices or
eliminating them from the market entirely.
Worse, the Baucus bill would impose a $4 billion tax on the
manufacturers of medical devices, a cost that would be passed on to
patients. It would also impose a $2.3 billion tax on drug
manufacturers, guaranteeing an increase in the cost of the
prescription drugs vital to the health of millions of Americans.
Also, under the bill, medical expenses would have to add up to 10
percent of a taxpayer's income before he could deduct them, instead
of the current 7.5 percent.
There is a reason for the pro-trial lawyer bias evident
throughout the "reform" proposals: The top contributor to President
Obama's presidential campaign was the legal industry, whose
donations came to more than $43 million. More than 80 percent of
the money given to Congress by lawyers, mostly from the plaintiffs'
bar, went to Democrats -- almost $22 million. As Howard Dean
admitted at a town-hall meeting in Virginia, there is no tort
reform in any of the Senate or House health-care bills because "the
people who wrote it did not want to take on the trial lawyers. ...
And that is the plain and simple truth."
Plain and simple, indeed. Another plain and simple truth is that
the best way for states to contain the growth of health-care costs
is to implement serious and sustained medical-malpractice reforms,
from caps on damage awards to medical-review boards that have to
approve the instigation of any malpractice claims. They also
shouldn't increase health-care costs by imposing onerous new taxes,
penalties, and requirements on medical providers, manufacturers,
and individual citizens.
It's not the government's job to take over health care or drive
private companies out of business. Until and unless Congress and
President Obama recognize that fact, more and more Americans will
voice their skepticism of the reform being proposed. And they will
be absolutely right to oppose turning the AMA into the GMA -- the
Government Medical Association.
Meese III, the attorney general of the United States
from 1985 to 1988, is Chairman of The Heritage Foundation's Center
for Legal and Judicial Studies. Hans
A. von Spakovsky is a visiting legal scholar at the
Heritage Foundation. He is also a former commissioner on the
Federal Election Commission and counsel to the assistant attorney
general for civil rights at the Department of Justice.
First appeared in National Review Online
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.
Health Care Initiative of the Leadership for America Campaign
Edwin Meese III
Ronald Reagan Distinguished Fellow Emeritus
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Hans A. von Spakovsky
Senior Legal Fellow / Manager, Civil Justice Reform Initiative
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