• Malpractice Reform in Texas: a Review

    This is mostly from an old post (at my old blog), but with the entry of Gov. Perry into the race, it seems like time to wheel it out.

    Over a year ago, a reader emailed me the following:

    I’ve read your site and seen you go on and on about how malpractice isn’t the problem with health care costs.  Can I tell you how tired people are getting about your distortions?  How can you say that when there are clear examples that it’s true.  For instance, Governor Perry and Speaker Gingrich said:

    Texas, for example, has adopted approaches to controlling health-care costs while improving choice, advancing quality of care and expanding coverage. Consider the successful 2003 tort reform.

    Everyone knows that Texas has brought down health care costs, which is how you get more people insurance.  They’ve attracted doctors to the state.  But you deny it, even when Republicans say it over and over (and your liberal media ignores it).

    When will you admit the truth?

    On Sunday, Gov. Perry said:

    “We’ve had the most sweeping tort reform in the nation,” he said, asserting that as a result of the law passed in 2003, there are 20,000 more physicians in Texas. He spoke of cutting taxes and sparking the best job growth of any state in the nation.

    Where to start?

    A lot of what I’m going to show you comes form the good work of Public Citizen.  I’m using their graphs (or creating some from their data) and cite them at the bottom.

    Let’s start with what Texas did.  They capped non-economic damages on malpractice lawsuits at $250,000.  It’s pretty much what they Republicans want to do with health care reform as well (see their plan).  And, yes, let’s be honest and say that when you cap damages, the total cost of payments goes down.  For instance, here are the total malpractice payments made in Texas from 1997-2008 according to the National Practitioner Data Bank.

    As you can see, total malpractice payments dropped by about two thirds since reform was enacted in 2003 (the line).  Is that good?  I don’t know.    That depends on the goal.  One goal is that it should result in cheaper malpractice insurance; it did.  But such insurance dropped on average by only 27% for physicians.  Where did the rest go?  Did the insurance companies keep it as profit?  Let’s push that off for another day.  Because no one is denying that capping damages will lower malpractice payments and therefore lower premiums.

    The contention under dispute is that capping damages will be “health care reform”.

    Did tort reform lower the costs of care?  Not according to the Dartmouth Atlas of Health Care (Selected Medicare Reimbursement Measures):

    Hmmm.  It appears that Medicare costs per enrollee went up faster than the national average.  In fact, Texas reimbursement rates in 2007 were the second highest in the country.

    Did tort reform lower the rates of uninsurance in Texas?  Not according to the US census:

    In fact, Texas has the highest rate of uninsured people in the United States.

    Did tort reform result in health insurance costs going down?  Not according to the Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey:

    Did tort reform result in doctors flocking to Texas to practice? Not according to Public Citizen and the Texas State Department of Health Services:

    Gov. Perry might be accurate in that the number of physicians increased since tort reform (but not by close to 20,000), but that’s mainly because the total population increased. Doctors did not preferentially move there above and beyond all sorts of other people in massive numbers. The number of physicians per population hasn’t changed that much.

    So let’s recap.  If you believe that tort reform will work than you must believe that (1) it makes doctors want to practice there and (2) lowers medical costs which will then (3) lower the cost of insurance and (4) result in fewer people being uninsured.  And, it seems, many of you believe Texas proves this to be true.

    You couldn’t be more wrong.  Since tort reform, the number of doctors per population remains stable, health care costs have gone up (along with insurance costs), and the number of uninsured remains the worst in the nation.

    There are probably some examples that can support the cause of tort reform, but Texas sure ain’t one of them.  Please stop using it.

    If you want to get even more detail, read Public Citizen’s Liability Limits in Texas Fail to Curb Medical Costs and Defensive Medicine and Disappearing Doctors.  And, if you are really engaged in this topic, read Tom Baker’s The Medical Malpractice Myth.

    UPDATE: Edited for clarity and to add a link.

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    • Any data on patient safety in Texas?

    • The 2003 Texas Tort Reform Act Governor Rick Perry signed is a legal weapon used against Texans.

      When there are laws on the books preventing the common man from getting accountability, no telling what will happen.

      Providing a link to a video showing just how Tort Reform is working out in Texas, or not.

      http://www.youtube.com/watch?v=JT7rxa21_Xo

      If you are unable to access link, just Google Cleveland Mark Mitchell, then click on youtube Cleveland Mark Mitchell December 12 1950 – April 26 2008.

      Thank you for your time,

      Cilla Mitchell

      A Texas nurse and vet

    • Steve Benen linked to you and it is a good piece.

      However I think you missed out on some really important issues. Like folks losing the ability to sue because based on the risk of losing versus the fruits of winning have caused quite a few lawyers to not accept cases. It just ain’t worth it too many times.

      Even case when people were seriously harmed by malpractice.

    • “But such insurance dropped on average by only 27% for physicians. Where did the rest go?”

      Insurance rates for physicians may have “only” dropped by 27%, but the total insurance premium has seen a reduction of 46%, on average. In order to provide an accurate statement about the total cost of being insured, you have to include the dividend the insurance companies pay back at the end of the year.

      “In fact, Texas has the highest rate of uninsured people in the United States.”

      Texas had the highest rate of uninsured people before the malpractice reform became law, so the statement above is misleading. However, since 2004, the difference between the uninsured rate for Texas and for the nation has narrowed.

      “The number of physicians per population hasn’t changed that much.”

      Actually, the number of direct care physicians per 100,000 people is now 162.3 in Texas. The growth rate since the reform took place surpasses the overall population growth rate. Also, the rate of growth in new physicians is now greater than the national average and is more than 25% higher than it was before the malpractice reform act.

      • These numbers are from?

      • Texas has 21.5 active physicians per 10,000 residents, vs. 27.7 nationally; it has 20.2 per 10,000 active in patient care, vs. 25.7 nationally. Your (unsubstantiated) arguments about “growth rate” have little to do with the fundamental reality: because both Government and industry in Texas contribute less to health care than anywhere else in the nation, physicians do not flock there. Malpractice insurance rates are irrelevant.

    • Great post, concise, to the point and filled with facts.

      Thanks

    • Wait, you mean something conservatives are talking about is utterly untrue — diametrically, completely, and totally false?
      I’m shocked.
      Next thing you know, they’ll be talking about another “Texas Miracle” — claiming that it’s the Publican Governor’s policies that let them balance their State’s budget — and concealing (or outright denying) that the only reason their budget was balanced was because of the “Porkulus” dollars Texas received from the Obama administration… the same “Porkulus” bill that every good TeaPartier knows was a completely ineffectual waste of THEIR tax dollars.

    • I read on the internet an article about tort reform here in TX that indeed there has been an immigration of doctors, those who have faced multiple malpractice suits in their own states and can no longer afford their insurance. Since TX no longer has any significant number of malpractice suits because lawyers can’t afford to take them, instead people are complaining to the licensing board and the number of complaints asking for licenses to be revoked has increased tremendously.

      Can you find any data to support or contradict this?

    • Responses to the 4 points:

      1) I think it’s hard to come up with a study or statistics that would reflect the decision process of someone like me. Thus, I have an anecdote that counters the conjecture above.

      I am a physician who relocated to California from a non-capped malpractice state. I practice in a high-risk specialty with high insurance premiums. Malpractice caps and insurance costs were a factor in my decision, although certainly not the sole factor. For example, I would not have relocated to Texas regardless of malpractice laws. However, I did choose California’s Sierra Nevada (with high income tax and expensive property) over Nevada’s Sierra Nevada (with no income tax and inexpensive property) in part because of the malpractice crisis in Nevada at the time of location. I note that the letters I continually receive from recruiters always mention the state’s malpractice climate, if it is favorable. Interestingly, the TV commercials advertising malpractice lawyers that were omnipresent in my old state are not on TV in California.

      Capping pain and suffering or other noneconomic damages does indeed limit the actual number of malpractice cases. For the lawyer, the calculation of whether to advance a claim is based upon the simple calculation of (% chance of success) x (likely fee if victorious). In states like California the chance of a pediatric death being litigated is low, as the main damages are pain and suffering (noneconomic damages) and the lawyer’s percentage will not cover expenses.

      2) I agree, but for a different reason. A short-term change in malpractice laws will not result in a short-term change of medical practices. Although I have been in California for a decade (and litigation-free), I still practice a great deal of what I consider to be defensive medicine. I define defensive medicine as practices that are generally recommended as standards of care, but which in the end are simply expert-accepted CYA maneuvers. Defensive medicine like this is hard to combat, however defensive medicine is quite expensive.

      Another anecdote: I once was sued because I did not order an outdated test that studies had shown was useless but was still a “standard of care” to at least some experts. Eventually my specialty college issued a practice guideline that removed the outdated test and instead recommended the algorithm I had used. Although my case was dismissed after depositions (with no money paid on my behalf), the lingering effects of the lawsuit remain. I know that I am more likely to order other tests of a defensive nature.

      This all happened while I was a faculty member at a major university medical center and affected the attitudes of my colleagues and residents (I was very open about the litigation). Multiply this by the thousands of practitioners who have either been sued or have seen colleagues sued. Then consider the uncertainty of medical outcomes (the public hears a lot about evidence-based guidelines, but never hears about the guidelines that were retracted because they were wrong, or the guidelines that conflict with each other). The end result is that every physician in America has been trained with the feeling that a lawsuit is just a matter of time. Only NATIONAL reform would change this climate, and a change in actual medical practice would require enough time for the previously conditioned physicians to change their attitudes.

      3) There is evidence that malpractice insurance costs sometimes drop or slow in a favorable climate. My current carrier just gave my facility a rebate due to low claims and decreased our rates going forward. The rebate amounted to several thousand dollars per physician. I am aware that malpractice insurance rates are also tied to the company’s return on outside investments, the desires of private equity owners, etc. So the relationship between malpractice costs and an individual state’s laws are not uniform on a state level.

      4) Theoretically, malpractice reform could change the costs of care, however I think my point (2) means that change would be a long way off. So I reluctantly come to the same conclusion as the author.

      • I have read that many tort claims for malpractice are drive by economic need. I don’t have the knowledge to evaluate that claim. I do have the knowledge to evaluate claims that bankruptcy is driven by medical costs and job loss associated with medical conditions. Those claims are true.

        There are studies showing that very simple behavioral changes in hospital practice can improve results – in particular, lowering infection rates – dramatically, but that doctors tend not to change behavior even when presented with those results. Malpractice cases rarely cite a failure of the doctor to practice adequate hygiene, even when negligence leading to infection is alleged. There are studies showing that an excess of one type of medical specialty in a locale leads to higher rates of unnecessary procedures from those specialties in that locale. Malpractice cases are not generally driven by hip-replacements or C-sections that were unnecessary, but rather by those which didn’t work out well for the patient.

        Defensive medicine exists and, according to SS, persists even when tort risks are reduced. Obama’s health care package aims at identifying unnecessary defensive practices, along with procedures which don’t work well. These cost reducing efforts have been ridiculed as useless and vilified as “death panels”.

        Tort reform may affect change, but the Texas example shows that the change is not profound. Accounting-based estimates of the cost-saving potential of tort reform show that potential to be quite small relative to the overall problem of medical cost inflation, quite small as a share of overall medical spending and vanishingly small as a share of US GDP.

        So we have lots of obvious areas for improvement that don’t involve tort reform, but do involve imposing a sort of best-practices regime. There is good evidence that self-regulation does not lead to best-practice medicine, at least not in the system we have. Our politics focus on tort reform, which is likely to produce little improvement in results or in cost containment, and overturning an effort at best practices which is intended to improve results and contain costs. We have medical insurance and welfare systems which drive medical malpractice action as a last resort for those who are unlucky or ill-provided for by the medical system. Blocking tort remedies does not address the underlying problem of health-driven poverty.

        We are kidding ourselves in squabbling over the trivia of health issues while ignoring the central role that health plays in welfare, and that best-practices plays in delivering good results at a reasonable cost.

    • If you want to see how little tort reform affects health care spending, look no further than the Dartmouth Atlas and other data from California, where the state has a bad case of split personality when it comes to health care. The northern part of the state, which is dominated by organized group practices (Kaiser, for instance) has a far lower spending pattern than the southern part of the state. This difference cannot be accounted for by prevalence of disease.

      So why are doctors and hospitals treating patients more conservatively in northern California? Because they’re delivering less defensive medicine? If that’s the case (and I doubt it) then tort reform, which is statewide, can’t be the reason.

      A better explanation for the difference between the two parts of the state have more to do with practice patterns than malpractice worries.

    • The difference in malpractice insurance premium between states would have to be WAY more substantial to be enough of a reason to encourage doctors to choose to practice in a new state. No one would make such a decision based on this single factor.
      Capping awards to plaintiffs simply allows businesses of any kind to incorporate bad acts – to “dollarize” questionable action – into a business plan.
      It is totally irrational, if not downright dishonest, to claim that anyone would simply pass on the “savings” from such a change in policy without being forced to as part of the reform. You will not find that requirement in any tort reform that insurance companies are supporting!

    • Texas Aggie made the point that some percentage of physicians with bad malpractice records moved here. I don’t think that is progress.

      I don’t think, however, that people understand that the malpractice caps have simply created a system that is “Republican” in the truest sense imaginable. A malpractice case for a prototypical Republican — a high earning white male — is still a good case, because economic damages for lost earnings and lost earning capacity are not capped. The only cases that have become uneconomic to handle are those for children, the elderly, housewives, and persons with low earnings, where non-economic damages for pain and suffering made a difference. That’s a two-fer in Rick Perry’s world: protect and enhance the rights of rich people and reduce or eliminate protections for the poor or weak.

    • I’m a Democrat MD (not my real name LOL) but there is NO QUESTION that OBs in particular are unfairly sued and pay Astronomical insurance rates! I ruled the specialty out and practice IM (which has its own BIG problems with reimbursement paperwork etc) I know that some babies come out like “Timmy and Jimmy” in South Park. It is tragic but usually NOT the MDs fault and the mobocracy of inner city juries and attorneys take them for Millions of dollars

      OB IS a gold mine and a happy specialty otherwise. But even if they accepted a 150k govt income in return for no liability worries you would all say theyre greedy sheltered mommas boys ignoring all they sacrifice to become physicians