This is a follow up to the recent “Malpractice Reform for (Doctors Who Are) Dummies” post. Over the weekend I found more ammunition for my argument that physicians are misinformed if they think tort reform is essential to reducing their malpractice premium costs. Further, while the high cost of malpractice premiums is an issue that needs to be addressed, it’s not a critical factor in the nation’s overall health care costs.
For years, conservatives blamed out-of-control malpractice litigation for rising health care costs. Today it’s an article of faith on the Right that the nation’s courts are clogged with greedy plaintiffs bringing frivolous cases against doctors in the hopes of getting a jackpot jury award (much evidence to the contrary). If only that were stopped, they say, health care costs would drop like a rock.
Let’s look at Texas. Texas has put itself through several rounds of reforming tort, beginning with a 1995 law that Gov. George W. Bush considered one of his crowning achievements. As explained in this PBS Frontline documentary, tort reform was identified as a winning wedge issue by Karl Rove back in the 1980s. At the time, some jury awards related to work-related injuries, such as mesothelioma from asbestos exposure, were making headlines in Texas. Rove persuaded Texans that greedy litigants and predatory trial lawyers were the bogeymen responsible for most of the states’ problems.
The most recent reform, the Medical Malpractice and Tort Reform Act of 2003, has been credited with cutting in half the number of malpractice lawsuits in Texas and reducing the cost of medical malpractice insurance by 30 percent. And that’s good, right?
There are two catches in this story. The first catch, as explained by Mitchell Schnurman of the Dallas/Fort Worth Star-Telegram:
Healthcare spending has grown faster in Texas than the rest of the country. Patients are paying more for health insurance and medical bills. Doctors do more tests and scans, an indication that so-called defensive medicine hasn’t declined here.
I keep writing about this, but it bears repeating — although doctors complain that they are forced to order unnecessary tests and procedures out of fear of being sued, in the real world cutting the risk of malpractice doesn’t change their test- and procedure-ordering habits. The claim that “defensive medicine” is a significant driver of health care costs appears to be a myth, albeit one that many doctors fervently believe.
And, one more time — clamping down on malpractice lawsuits and capping awards has no impact on overall health care costs. We’ve seen this over and over again, in state after state. Even signficantly reducing malpractice costs and physician’s malpractice insurance premiums do not stop health care costs from shooting up. Yet the myth that tort reform is key to lowering health care costs will not die.
But, you might say, at least the doctors got some good out of it, right? This takes us to the other catch. There is evidence the insurance companies in Texas did not drop their rates because of tort reform, but because the state’s insurance commissioner forced them to drop their rates. Shortly after the passage of the Medical Malpractice and Tort Reform Act of 2003, two major Texas insurance carriers requested increases in malpractice insurance rates. One, the Joint Underwriting Association, filed for a rate increase of 35 percent and 68 percent for doctors and hospitals, respectively. Malpractice insurance rates did not increase only because the state insurance commissioner denied the request.
Americans for Insurance Reform and the Center for Justice and Democracy (and, yes, the latter is a trial lawyers’ association) have data that show increases and decreases in physicians’ medical malpractice insurance have less to do with malpractice costs than with swings in the business cycle that have nothing to do with tort. Differences in malpractice insurance premium costs from one state to another often are more the result of state insurance boards keeping their thumbs on what insurers charge, or not, than whether tort is “reformed.”
It’s important for physicians to understand that, while they have a legitimate grievance about the cost of their malpractice premiums, it makes no sense for them to insist that tort reform be part of the nation’s health care reform policies. And it’s important for everyone to understand that, as far as out-of-control health care costs are concerned, tort is a red herring.