Yes, Deal Better With The Issues But Don’t Get Sidelined From More Costly, Needed Health

A contentious cloud hangs over the health care reform debate. Medical malpractice costs are a flash point for physicians and malpractice trial lawyers, each side claiming their solutions must be heeded to avoid potential disaster for patients and our health care delivery system. I believe the issue is a distraction, but that doesn’t mean it shouldn’t be addressed. The topic obstructs discussion of the higher impact reforms we need to tackle. It’s out there, like a sore thumb, so I’d like to walk through some of the important aspects of medical malpractice reform, and then talk about some solutions. Certainly, each side in the debate has legitimate concerns. The cost of malpractice insurance and the threat of being sued influences doctors. Some say it permeates the system and leads to defensive medicine, or physicians performing tests and procedures that are not needed. Doctors spend time and money, the argument goes, covering all possible medical options to protect themselves from lawsuits. Indeed, a 2005 study found that 93 percent of physicians responding to a survey reported practicing some form of defensive medicine.

In some cases, physicians say they would not choose a high-risk specialty, such as obstetrics or neurosurgery, or they have left those specialties, because of the threat of legal action. And to give credence to the other side of the argument, some lawyers and patient advocates say we risk becoming a system where patients harmed by negligence or incompetence do not receive fair compensation, or where truly negligent or incompetent health care providers are not held accountable. The truth is medical malpractice costs both direct costs of insurance premiums and indirect costs of defensive medicine are not among the primary drivers of health care costs. Percent direct costs in 2009 to providers of medical malpractice liability insurance, costs including insurance premiums, settlements, awards and administrative costs, totaled $35 billion, according to the Congressional Budget Office If those costs were lowered by 10 percent, it would reduce national health expenditures by 0.2 percent.

Even if reforms resulted in less use of health care services driven by fear of lawsuits, savings to the system would be about 0.5 percent, or $11 billion in 2009. Let’s compare those costs with the true culprits in out-of-control costs of health care: The economic toll of millions of Americans who don’t have health insurance dwarfs the impact of malpractice by as much as 20-fold. Because many of the elements of the health reform law will not take effect until 2014, some 50 million Americans go without health insurance. The cost of uninsured people to the system comes in at around $124 billion a year in direct costs to doctors, hospitals and other providers. That figure doubles when you add in the costs to society of shorter lives, poorer health and lost productivity. And let’s not forget that the uninsured eventually receive health care. But they wait longer and their care costs more because patients are sicker; they also tend to use the highest-cost services, such as emergency rooms.

When uninsured patients finally receive medical care, about a third of the cost, or $40 billion, is uncompensated, according to a Kaiser Family Foundation analysis of 2004 costs. That means doctors, hospitals and providers never get paid and the costs they’re forced to write off make their way onto the escalating costs of health insurance premiums. It is true that about 30 percent of health care spending goes for tests, procedures, hospital stays and other procedures that are unneeded, don’t help patients and may, in fact, harm them. But there is no evidence to support the assumption that fear of lawsuits is solely, or even primarily, responsible for propelling health care costs. As long as our health care system rewards doctors and hospitals for doing more, they will do more, regardless of any change in malpractice laws. Defensive medicine is not the real culprit. The CBO numbers indicate it accounts for only about 0.3 percent of health care expenditures.

Sybe recognizes and supports the following organizations:
Health care reform
Congressional Budget Office
Kaiser Family Foundation

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