HOW DOES #TORT REFORM AND LIMITING #DEFENSIVE MEDICINE AFFECT TOTAL U.S. #HEALTHCARE EXPENDITURES?

#EXPERTS SHOW THE NON SIGNIFICANT IMPACT ON TOTAL HEALTHCARE EXPENDITURES.

Some special interests are calling for provisions to limit the legal liability of hospitals and medical care providers. You have likely heard the claim that the rising cost of medical malpractice insurance is driving doctors out of practice. Take away the threat of lawsuits, certain special interests claim and the country’s health care costs will drop. There is also a cry that defensive medicine as a byproduct of medical malpractice activities is further exacerbating the financial burden on healthcare in the U.S.

But a new report paints a very different picture. True Risk: Medical Liability, Malpractice Insurance and Health Care,* concludes that limiting the liability of negligent hospitals and medical professionals would have virtually no impact on the cost of health care in this country. In fact, the study found that the cost of medical malpractice premiums are the lowest they have been in at least thirty years, the period for which data was studied. Medical malpractice premiums are less than ½ of 1% of all health care costs, and medical malpractice claims are a miniscule 1/5th of 1% of health care costs. Moreover, the states that have severely limited patients’ rights through so-called medical malpractice tort reform have similar malpractice insurance rates as states that have not so severely limited patients’ rights. Finally, the study found that medical malpractice insurers’ profits are generally higher than the rest of the property casualty industry.

All told, the report concludes, limiting patients’ rights will not lead to affordable health care for all Americans. All so-called medical practice tort reform does is shield the negligent from the cost of their mistakes, putting the burden on the injured patient. Significantly, the study concludes that placing further limits on the liability of negligent doctors and unsafe hospitals would be unjustifiable, and would put almost no dent in our country’s health care costs.

The study adds that “If Congress completely eliminated every single medical malpractice lawsuit,” it says, “including all legitimate cases, as part of health care reform, overall health care costs would hardly change, but the costs of medical error and hospital-induced injury would remain and someone else would have to pay.”

All of this only confirms the position trial lawyers have been taking, which is that removing or further limiting medical liability would mean robbing patients of the only meaningful check and balance they have. Limiting liability is not a way to save the country money, and it’s not fair for patients who are wrongfully injured or who lose their lives due to negligence.

"Our research makes clear that medical malpractice claims and premiums have almost no impact on the cost of health care “Our study also shows that states that have passed severe medical malpractice tort restrictions on victims of medical error have rate changes similar to those states that haven’t adopted these harsh measures.

WHAT ABOUT THE ADDED EXPENSES OF DEFENSIVE MEDICINE?
Defensive medicine is defined as "a deviation from sound medical practice, induced primarily by threat of liability."

It is divided into two categories, assurance and avoidance behaviors. Assurance behavior, or positive defensive medicine, is practiced by most physicians and involves the supply of additional services of negligible medical value to reduce adverse outcomes, deter patients from filing malpractice claims, or persuade the legal system that the standard of care was met.

Avoidance behavior, also known as negative defensive behavior, reflects physicians' efforts to distance themselves from potential legal risk. They do so by restricting their practice, refusing to perform high-risk procedures, and avoiding patients with complex problems or patients perceived as litigious. This type of behavior usually stems from a fear of uninsured non-monetary costs driving the physician out of business or the view that the downside of malpractice is greater than the upside of treatment.

To demonstrate the prevalence of defensive medicine, the Harvard School of Public Health and Columbia Law School surveyed physicians practicing in Pennsylvania, a state once infamous for having the highest malpractice insurance premiums in the country. The study, conducted in 2005, received responses from over 800 physicians in six specialties, with approximately 93% of doctors responding affirmatively when asked whether they practiced medicine defensively.

Defensive medicine is accompanied by an unexpectedly high overall cost, masked by the fact that these costs are split between doctors, patients, insurers, and the government. To gauge the burden of defensive medicine, Daniel P. Kessler and Mark B. McClellan compared healthcare costs in the 28 states with laws that limit punitive damages that can be paid out in malpractice lawsuits with states that do not. The effects of malpractice liability reforms were analyzed using data on Medicare beneficiaries treated for serious heart disease in 1984, 1987 and 1990. In contrast to the above study Kessler and McClellan found that liability reforms could reduce defensive medicine practices.

The results of Kessler and McClellan's study applied to current health care expenditure to approximate the cost of defensive medicine and the nation's $1.4 trillion annual health care expenditure in 2005 (estimated to be over $2 trillion this fiscal year by President Obama), show that health care costs could have been reduced by $124 billion overall and government expenses by $50 billion per year. Adding the cost of defending malpractice cases, paying compensation, and covering additional administrative costs is a total of $29.4 billion. If these numbers are correct and one calculates the savings to the nations health care expenditures if defensive medicine was eliminated on my calculator [ph] the total cost of defensive medicine using Kessler and McClellan's numbers is $205 billion divided by the total cost of the nation’s healthcare expenditures of < $2 trillion equals > 1%.

Overall, while defensive medicine, is a negative trend in medical care, the total costs associated with it appears to be nor more than <1% of the total U.S. healthcare expenditures. Healthcare in the United States is already a financial burden for many Americans, but placing caps on punitive fines for these lawsuits through tort reform and even completely eliminating all direct and indirect costs of defensive medicine will not significantly alleviate the financial burden of the American healthcare system.

SUMMARY
� Medical malpractice premiums, inflation-adjusted, are nearly the lowest they have been in over 30 years.

� Medical malpractice claims, inflation-adjusted, are dropping significantly, down 45 percent since 2000.

� Medical malpractice premiums are less than one-half of one percent of the country"s overall health care costs; medical malpractice claims are a mere one-fifth of one percent of health care costs. In over 30 years, premiums and claims have never been greater than 1% of our nation"s health care costs.

� Medical malpractice insurer profits are higher than the rest of the property casualty industry, which has been remarkably profitable over the last five years.

� The periodic premium spikes that doctors experience, as they did from 2002 until 2005, are not related to claims but to the economic cycle of insurers and to drops in investment income.

� Many states that have resisted enacting severe restrictions on injured patients" legal rights experienced rate changes (i.e., premium increases or decreases for doctors) have similar costs to those states that enacted severe restrictions on patients" rights, i.e., there is no correlation between "tort reform" and insurance rates for doctors.

The total costs of defensive medicine are a mere 1% of the total U.S.healthcare expenditures and eliminating these costs would have virtually no impact on the cost of health care in this country. Indeed medical practice tort reform to prevent defensive medicine would instead shield the negligent from the cost of their mistakes, and put the burden on the patient who is wrongfully injured.

*The study was co-authored by Gillian Cassell-Stiga and Joanne Doroshow of the Center for Justice & Democracy and J. Robert Hunter, an actuary who serves as Director for the Consumer Federation of America. Hunter is also the former Commissioner of Insurance for the State of Texas and served as Federal Insurance Administrator under the Ford and Carter Administrations.

Articles Referenced:
Hellinger, FJ, WE Encinosa. "The Impact of State Laws Limiting Malpractice Damage Awards on Health Care Expenditures." American Journal of Public Health 96(8)(2006): 1375-81.
• Kessler, DP, N Summerton, JR Graham. "Effects of the Medical Liability System in Australia, the UK and the USA." Lancet 368(9531)(2006): 240-6.
• Manner, Paul A.. "Practicing defensive medicine--Not good for patients or physicians." AAOS Now (2007).
• Studdert, DM, MM Mello, WM Sage, CM DesRoches, J Peugh, K Zapert, TA Brennan. "Defensive Medicine among High-Risk Specialist Physicians in a Volatile Malpractice Environment." The Journal of the American Medical Association 293(21)(2005): 2660-2.
• Weinstein, Stuart L.. "The Cost of Defensive Medicine." AAOS Now (2008).


Please remember, as with all our articles we provide information, not medical advice.
For any treatment of your own medical condition you must visit your local doctor, with or without our article[s]. These articles are not to be taken as individual medical advice.

* Tune in tomorrow for INCREASED RISK OF STROKE IN PATIENTS WITH PSORIASIS.

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