In an apparent concession to Republicans on health care reform,
President Obama broached the topic of medical liability reform
Wednesday night in his health care speech before Congress:
Now, finally, many in this chamber--particularly on the
Republican side of the aisle--have long insisted that reforming our
medical malpractice laws can help bring down the cost of health
care. ... Now, I don't believe malpractice reform is a silver
bullet, but I've talked to enough doctors to know that defensive
medicine may be contributing to unnecessary costs. So I'm proposing
that we move forward on a range of ideas about how to put patient
safety first and let doctors focus on practicing medicine. I know
that the Bush Administration considered authorizing demonstration
projects in individual states to test these ideas. I think it's a
good idea, and I'm directing my Secretary of Health and Human
Services to move forward on this initiative today.
Upon analysis, however, the President's medical malpractice
proposal is meaningless in the context of the health care reform
debate and does not affect the trajectory of Democrat health care
reform bills currently before Congress in any way.
More of the Same
Many observers looked for President Obama to strike a mollifying
tone with opponents by putting forward serious compromises on
issues such as the public option and the total cost of the plan.
Instead, what they heard was a rehashing of his prior speeches on
health care reform: sticking with the public plan; maintaining the
budget-busting, $900 billion-plus price tag (which includes hefty
tax increases); overruling traditional state authority to regulate
the health insurance industry; completely ignoring states'
important role as laboratories in developing innovative health
reform solutions; and imposing onerous mandates on individuals and
employers to purchase health insurance.
The lone paragraph on medical malpractice may have been the most
conciliatory moment in President Obama's entire speech. Yet the
President did not say that he demanded or would support medical
liability reform as part of a health care reform bill sent to his
desk. Rather, he proposed a purely administrative action led by
Secretary of Health and Human Services Kathleen Sebelius that
requires no action by Congress. He also did not give any specifics
on the types of demonstration projects that would go forward, nor
did he offer any timeline or say how results would be evaluated,
disseminated, or used.
While what exactly the President wants to do on the medical
liability reform issue remains a mystery, the following is clear
States Already Have the Authority to Move Forward with
Medical Liability Reform. Medical malpractice reform falls
squarely within the authority of the states. Many states--including
Georgia, Texas, and Mississippi--have moved forward with reforming
their own medical liability laws and have seen positive results for
their citizens. Texas, for example, enacted serious reforms in
2003, including a cap on non-economic damages in medical
malpractice suits. Since then, medical liability insurance premiums
have declined and doctors have flooded into the state to practice
Defensive Medicine Exists, and It Does Increase
Unnecessary Costs. While President Obama admitted that
defensive medicine "may" lead to unnecessary costs, there is no
doubt that defensive medicine occurs every day and that the costs
to the health care system are staggering.
A 2008 study found that 83 percent of Massachusetts doctors
surveyed admitted to practicing some kind of defensive medicine.
The study estimated that 18-28 percent of tests, procedures,
referrals, and consultations and 13 percent of hospital admissions
were prescribed to avoid lawsuits. The researchers conservatively
estimated $281 million in unnecessary physician costs and over $1
billion in excessive hospital admissions in Massachusetts alone. In
2004, Duke University Professor Christopher Conover estimated
nationwide defensive medicine costs at $70 billion a year, a sum
that would cover nearly 80 percent of the Obama plan.
The Current Medical Liability System Serves Trial Lawyers,
Not Patients or Doctors. A highly credible 2006 study published
in the New England Journal of Medicine concluded that 40
percent of medical malpractice claims lacked merit. Whether or not
a claim has merit, the doctors' costs of defending a claim in court
are substantial, averaging over $52,000 per claim. The same study
found that medical malpractice claims take an average of five years
to resolve, imposing significant hardship on severely injured
patients as well as doctors called to defend their reputations and
livelihoods in court.
The tort system carries with it enormous administrative overhead
costs, including court costs, attorney fees, and expert witness
fees. These overhead costs consume the largest share of injured
plaintiffs' damage awards in medical malpractice cases, absorbing a
whopping 54 cents of every dollar of patient compensation.
Promising Medical Malpractice Reform Options Exist for
States. While capping non-economic damage awards has been
highly successful in a number of states, it is not the only option
available to state policymakers. Other innovative proposals exist,
such as early offer programs, special medical courts, and even
special kinds of insurance that patients can purchase to insure
themselves against adverse medical outcomes.
Provided they are held to be enforceable in court, private
contracts between patients and doctors can also serve as gateways
into innovative settlement arrangements designed to dispose of
claims quickly, compensate injured patients for their real economic
losses, and reduce overhead costs. Parties to a lawsuit can even
reach a settlement online.
These innovative settlement or arbitration agreements, entered
into before treatment is initiated and binding on the parties, are
theoretically possible in nearly every state. However, states may
have to bolster such agreements' enforceability in court and
require that best practices are followed to protect patients'
Olive Branch or Fig Leaf, but No
By proposing a nebulous, non-committal, no-strings-attached
demonstration project on medical liability reform Wednesday night,
President Obama has moved the ball forward little on his health
care reform agenda. Perhaps demonstration projects can provide some
information that will be useful in the future, but there is no
indication that his proposal will have any impact on the health
While some Members of Congress may try to use the proposal as a
fig leaf with their constituents in an effort to say they are doing
something about runaway medical lawsuits, it is indeed the slimmest
of olive branches for those who are deeply concerned about the
direction of health care reform. And it is certainly no silver
bullet for what ails the President's health care reform proposal
Randolph W. Pate is Visiting Fellow
in the Richard and Helen DeVos Center for Religion and Civil
Society at The Heritage Foundation.