Healthcare: The CBO on Malpractice Tort Reform

The Congressional Budget Office said ...

National implementation of a package of proposals similar to the preceding list would reduce total national premiums for medical liability insurance by about 10 percent, CBO now estimates.

CBO estimates that the direct costs that providers will incur in 2009 for medical malpractice liability--which consist of malpractice insurance premiums together with settlements, awards, and administrative costs not covered by insurance--will total approximately $35 billion, or about 2 percent of total health care expenditures.

Because medical malpractice laws exist to allow patients to sue for damages that result from negligent health care, imposing limits on that right might be expected to have a negative impact on health outcomes. There is less evidence about the effects of tort reform on people's health, however, than about its effects on health care spending--because many studies of malpractice costs do not examine health outcomes. Some recent research has found that tort reform may adversely affect such outcomes, but other studies have concluded otherwise.

See the report to Honorable Orrin G. Hatch by the Douglas W. Elmendorf, October 9, 2009.

Healthcare: Medical Malpractice System Breeds More Waste

The fear of lawsuits among doctors does seem to lead to a noticeable amount of wasteful treatment. Amitabh Chandra -- a Harvard economist whose research is cited by both the American Medical Association and the trial lawyers' association -- says $60 billion a year, or about 3 percent of overall medical spending, is a reasonable upper-end estimate.

All told, jury awards, settlements and administrative costs -- which, by definition, are similar to the combined cost of insurance -- add up to less than $10 billion a year. This equals less than one-half of a percentage point of medical spending.

If you talk to doctors about malpractice, you come to realize that the root of their objections isn't financial. ... the malpractice system does affect the morale of doctors. It leaves them wondering when they will be publicly accused of doing the very thing they've sworn not to do: harm patients.

See Medical Malpractice System Breeds More Waste by David LeonhardT, September 22, 2009.

Healthcare: The Medical Malpractice Myth

One study ...

found that doctors were injuring one out of every 25 patients--and that only 4 percent of these injured patients sued.

Another study ...

found that more than 90 percent of the claims showed evidence of medical injury, which means they weren't frivolous. In 60 percent of these cases, the injury resulted from physician wrongdoing. In a quarter of the claims, the patient died.

When baseless medical malpractice suits were brought, the study further found, the courts efficiently threw them out. Only six of the cases in which the researchers couldn't detect injury received even token compensation. Of those in which an injury resulted from treatment, but evidence of error was uncertain, 145 out of 515 received compensation. Indeed, a bigger problem was that 236 cases were thrown out of court despite evidence of injury and error to patients by physicians. The other approximately 1,050 cases, in the research team's opinion, were decided correctly, with damage awards going to the injured and dismissal foiling the frivolous suits.

See The Medical Malpractice Myth by Ezra Klein, July 11, 2006.