Defensive medicine. We've heard the opinion that it is driving up health care costs, and therefore health insurance premums across the U.S. But what is its impact? And specifically,what effect would tort reform have on reducing health care costs?
CBO Analysis
The Congressional Budget Office (CBO) estimates, on the basis of an analysis incorporating the results of recent research, that tort reform would reduce total national health care spending by about 0.5 percent (about $11 billion in 2009). That figure is the sum of the direct reduction in spending of 0.2 percent from lower medical liability premiums, and an additional indirect reduction of 0.3 percent from slightly less utilization of health care services.
Survey Statistics Bare it Out
A survey by the Journal of the American Medical Association found that 93 percent of physicians practice what we call defensive medicine: that is, ordering tests, procedures, and referrals that are not medically necessary for the sole purpose of protecting the doctor or the hospital against medical malpractice claims. The estimated cost of defensive medicine ranges from $191 billion to $239 billion in the last year for which we have statistics, 2008 [Pacific Research Institute, "Health Policy Prescriptions," Oct. 2009]. These higher costs are passed on to consumers in the form of higher health care insurance premiums, and that in turn squeezes an estimated 3.4 million people out of the ability to purchase health insurance."
Conservative Presidential Candidates Weighs in
Newt Gingrich: When he was Senior Fellow at the American Enterprise Institute and former Speaker of the US House of Representatives, and now Presidential candidate, Gingrich wrote the following in February 2010 in the NY Times: "CAT scans, blood tests, ultrasounds, Caesarean sections- in many instances, these diagnostic tools and procedures are vital for treating patients. Too often, however, such procedures are ordered unnecessarily and drive up the cost of medicine for patients, taxpayers and insurance carriers," Gingrich argued.
"Doctors order these procedures to protect against frivolous suits filed by trial lawyers seeking an easy payout, particularly after a doctor makes a simple mistake. Seventy-three percent of the doctors surveyed said they had practiced defensive medicine in the past year. As a result, American patients not only endure extra hours of tests and treatments but also pay more for health care. Congress must give states the incentive to reform their civil justice systems so that lawyers will think twice before suing doctors for frivolous cases," Gingrich concluded.
Herman Cain: Herman Cain prefers a recent proposed health care reform alternative, H.R. 3400, to ObamaCare. Looking closely at HR 3400 there are noteworthy items related to abortion funding and severe restrictions. Cain is a strict anit-abortionist, okay, that makes sense. Moving on, another central theme of HR 3400 is tort reform.
Regarding tort reform, or medical liability limitations, in HR 3400, its built in as part of the reduction in costs. Another central theme is allowing the sale if insurance across state lines and HSA (health savings accounts) were part of the product line.
But let's focus on tort reform. Cain favors what he calls "legitimate and sweeping tort reform that lets doctors practice medicine without fear of frivolous lawsuits.” He believes that the ease of “filing baseless medical malpractice and product liability lawsuits,” is hurting America’s health care system, according to a report by CLub For Growth.
Rick Perry: If Perry had his way, all the states would do as Texas did in 2003 when lawmakers enacted legislation, which he championed as Governor, limiting the amount of money juries can award patients who win malpractice lawsuits against doctors and hospitals. The legislation capped non-economic (pain and suffering) damages at $250,000 in lawsuits against doctors and $750,000 against hospitals. A few months after he signed the bill into law, the state’s voters narrowly passed a constitutional amendment, also endorsed by Perry, which had the same effect. Proponents of the amendment wanted to be sure the new law would be constitutional.
Several of the candidates also support expanded Health Savings Accounts, “In order to qualify for a Health Savings Account, the individual or family must purchase a high deducible health insurance policy. These are special policies that have a minimum deductible of $1000 to a maximum of $5000 for an individual and $2000 to $10,000 for a family. The higher the deductible, the lower the premium.” Under an HSA, you better have some cash put aside – you’ll have to pay for everything out-of-pocket. Get the flu? Better have the cash. Need a check-up? Budget an extra couple hundred into the budget that month. Routine medications? Out of pocket. If you have a high-deductible health insurance plan, that means you need to have cash on hand to cover the outlay.
