Malpractice Suits Aren't Driving the High Cost of Health Care

Plenty of reasons exist to support medical malpractice reform. Doing it to slow the dizzying growth in health care spending isn't among them.

President Barack Obama fanned the flames of that long-simmering debate last week when he said he'd consider tort reform as part of his health care overhaul.

Exactly what he has in mind still is unclear. But it probably falls far short of a federal cap on malpractice awards that Republicans and physician groups support. The president spoke only of "demonstration projects" at state levels.

Whatever form those projects might take, few economists believe tort reform by itself — even the most radical tort reform — would significantly reduce what Americans spend on health care. Most experts say the big reasons for high U.S. health spending are chronic illness, expensive new medical technology and an aging population. Lawsuits are far down the list.

The most authoritative estimates put the direct cost of malpractice litigation — insurance premiums, lawyers' fees and awards to injured patients — at about 2 percent of overall health care spending. Premiums make up about half of that.

With an estimated $2.5 trillion in overall health care spending this year, 2 percent is about $50 billion, not an insignificant number. But compared to other health care expenditures, it's a drop in the bucket. For example, experts estimate we'll spend as much as $830 billion this year on treatments that provide no benefit to patients.

Even the most aggressive tort reform wouldn't save all of the direct costs. The biggest portion of malpractice settlements and jury awards are not for "pain and suffering" or punitive damages, but for actual damages — lost income and future medical treatment.

Meanwhile, insurance companies providing malpractice insurance are doing pretty well.

Last year in Missouri, they paid out only $1 in awards for every $5 they collected in premiums. The number of claims in 2008 was the lowest in the 30 years.

Proponents of tort reform often say the real savings would come from reducing defensive medicine: If doctors didn't have to worry about being sued, they'd order fewer unnecessary tests.

But there's no agreement on how to define, let alone how to measure, defensive medicine. Some extra tests surely benefit patients; doctors aren't always right in their diagnoses.

In any case, the changes most often prescribed by tort reformers — things like caps on pain-and-suffering awards or punitive damages — wouldn't reduce the chance that doctors could be sued.

In states that have enacted some measure of tort reform, including Missouri, which limited so-called non-economic damages in 2005, health care spending is rising just as fast as it is elsewhere. It hasn't declined in any state, no matter what legal reforms were put in place.

A 2006 report by the Congressional Budget Office found that there were no reliable studies that showed tort reform by itself reduced health care spending.

One point made by tort reformers is undeniably true: Some people awarded damages under the current system aren't victims of malpractice; they're victims of bad outcomes. Even with the best care, people sometimes die or suffer serious injuries. Those patients deserve sympathy, not compensation.

It also is true that many, if not most, victims of malpractice never file suit, often because the cost of bringing suit is more than what they could hope to recover. Those patients deserve compensation for their actual injuries.

Many opponents of Mr. Obama's reform plans point to tort reform as a kind of silver bullet to reducing health care costs. Like many of their claims, the facts don't bear that out.

REPRINTED FROM THE ST. LOUIS POST-DISPATCH.

DISTRIBUTED BY CREATORS.COM