Huge Medical Malpractice Study: Damage Limits Not Warranted

Americans for Insurance Reform released a study earlier this week showing that in recent years, doctor premiums and medical malpractice claims have overwhelmingly dropped, while the profits of the medical malpractice insurance industry have soared. Significantly, the study concludes that placing further limits on the liability of negligent doctors and unsafe hospitals would be unjustifiable, and would put almost no dent in our country’s health care costs.
AIR’s report, True Risk: Medical Liability, Malpractice Insurance and Health Care, is by Gillian Cassell-Stiga and Joanne Doroshow of the Center for Justice & Democracy, and actuary J. Robert Hunter, who is Director of Insurance for the Consumer Federation of America (CFA), former Commissioner of Insurance for the State of Texas, and former Federal Insurance Administrator under Presidents Carter and Ford.

In describing the study’s findings, Hunter said, “Thirty years of inflation-adjusted data show that medical malpractice premiums are the lowest they have been in this entire period. This is in no small part due to the fact that claims have fallen like a rock, down 45 percent since 2000. The periodic premium spikes we see in the data are not related to claims but to the economic cycle of insurers and to drops in investment income. Since prices have not declined as much as claims have, medical malpractice insurer profits are higher than the rest of the property casualty industry, which has been remarkably profitable over the last five years. -AIR

The findings apply equally to states that have placed major tort restrictions on victims of medical malpractice and to states that have not.

The study adds that because medical malpractice premiums amount to less than 0.5% of overall health care costs, with medical malpractice claims amounting to 0.2% (yes, these are tiny decimals) of health care costs, limiting liability any more will simply not have a significant effect on these health care costs. “If Congress completely eliminated every single medical malpractice lawsuit,” it says, “including all legitimate cases, as part of health care reform, overall health care costs would hardly change, but the costs of medical error and hospital-induced injury would remain and someone else would have to pay.”

All of this only confirms that removing or further limiting medical liability would mean robbing patients of the only meaningful check and balance they have on the impossible monstrosity of a system that American health care has become. Limiting liability is not a way to save the country money, and it’s not fair for patients who are wrongfully injured or who lose their lives due to negligence.
Read AIR’s full study here.

Malpractice Payouts Fall Across the Country

Medical malpractice payouts continued to fall across the country last year and account for a minuscule portion of health-care costs, the watchdog group Public Citizen reports.

Using data from the federal government's National Practitioner Data Bank (NPDB), the group found the number of payouts declined for the third straight year. In addition, the 11,037 payments recorded in 2008 were 31% fewer than the average number of payments recorded by the NPDB in all previous years.

That doesn't mean safety efforts have been successful, the report asserts. “There is no evidence that medical errors have declined. Rather than pointing to safer medical care, the reduction almost certainly means that there are ever more malpractice victims not receiving compensation.”

The cost of the malpractice liability system, measured broadly by adding all malpractice insurance premiums, fell to less than 0.6% of the $2.1 trillion in total national health-care costs in 2006, the most recent data available, according to the Public Citizen analysis. The cost of actual malpractice payments fell to less than one-fifth of 1% of all health-care costs in 2006.

Public Citizen doubts national tort reform will have much impact on spiraling health costs. “Any way you measure it, medical liability accounts for less than 1% of the country's health-care costs, and the vast majority of victims receive no compensation whatsoever,” said David Arkush, director of Public Citizen's Congress Watch Division.Click here for the full report.