Medical Malpractice - The Case For Medical Liability Reform

The Case For Medical Liability Reform

Proponents of medical liability reform argue that medical malpractice lawsuits restrict patient access to health care by driving physicians out of business or encouraging them to limit high-risk procedures. One in 12 obstetricians who have reported changes in their practice as a result of the risk or fear of professional liability claims have stopped delivering babies.

Medical Liability reform took place in Texas in 2003. Many physicians said they moved to Texas as a result. According to the Texas Medical Board, "Medical license applications jumped 58% from 2,561 in 2003 to 4,041, an unprecedented number, according to the Texas Medical Board. The state saw a 7.2% growth in the number of ob-gyns between May 2003 and May 2008. Similar increases were observed in other specialties." (Texas population grew by a substantially larger percentage in the same period.) According to the Texas Insurance Department, physicians in Texas have seen a 25% overall drop in medical liability insurance rates since 2003.

Physician advocacy groups say 60% of liability claims against doctors are dropped, withdrawn, or dismissed without payment. However even those cases have a price, costing an average of more than $22,000 to defend in 2008 ($18,000 in 2007). Physicians are found not negligent in over 90% of cases that go to trial - yet more than $110,000 (2008 estimate, $100,000 in 2007) per case is spent defending those claims.

Malpractice has both direct and indirect costs, including "defensive medicine." According to the American Medical Association, defensive medicine increases health systems costs by between $84 and $151 billion each year. Studies place the direct and indirect costs of malpractice between 5% and 10% of total U.S. medical costs, as described below:

"About 10 percent of the cost of medical services is linked to malpractice lawsuits and more intensive diagnostic testing due to defensive medicine, according to a January 2006 report prepared by PricewaterhouseCoopers LLP for the insurers’ group America’s Health Insurance Plans. The figures were taken from a March 2003 study by the U.S. Department of Health and Human Services that estimated the direct cost of medical malpractice was 2 percent of the nation’s health-care spending and said defensive medical practices accounted for 5 percent to 9 percent of the overall expense."

In one study of defensive medicine, Daniel P. Kessler and Mark McClellan found that, in treatment of heart disease, malpractice reforms reduced costs by 5% to 9% without affecting deaths or complications.

Other estimates conclude that the cost of the medical liability system, including defensive medicine, is up to 3%. Uwe E. Reinhard wrote that many analyses of the costs of the malpractice system don't consider the benefits, such as compensating injured patients and motivating improvements. Proposed reforms would only reduce national health spending by 0.5%, according to the Congressional Budget Office. It should also be noted that litigation driven defensive medicine results - by definition - in doctors ordering medical care that they believe will hurt a patient because they want insulation from a potential malpractice lawsuit for which the vast majority of doctors have medical insurance. Some argue that these studies are written by those with a bias towards tort reform, are simply inaccurate, and underestimate the extent to which doctors put their patients' interests above their own potential fears of litigation.

Many supporters of medical liability reform believe that laws modeled after California's Medical Injury Compensation Reform Act (MICRA) should be passed at the federal level. "California is the perfect model for federal medical malpractice reform", said Lisa Maas, executive director of Californians Allied for Patient Protection. "MICRA is considered the gold standard in terms of what other states look to in tort reform in the medical liability area."

MICRA was passed in the midst of a medical liability crisis in 1975, as premiums soared and some California physicians were unable to find liability coverage. The law limits non-economic damages in medical malpractice cases to $250,000. It also imposes a sliding scale on plaintiffs' attorney fees that prohibits them from charging more than 40% on any recovery.

MICRA advocates say the law has stabilized liability costs and preserved access to thousands of physicians, nurses, hospitals and other healthcare providers. In particular, MICRA is said to protect specialty and high-risk services, including women's services, community clinics and rural providers that can least afford skyrocketing insurance costs. In addition, supporters say MICRA has saved healthcare consumers tens of billions of dollars by protecting against runaway damage awards. Consumer advocates contend that MICRA had little effect, and that doctors did not see any rate relief until insurance reform was passed with Proposition 103, which ordered a rate rollback and enacted strict regulation on insurance companies.

The American Medical Association is leading a campaign to pass medical liability reform and protect patient access to health care. AMA Leaders are working with state medical associations to enact and defend strong tort reform laws. They continue to advocate for federal reforms based on solutions such as the MICRA laws.