• The odd logic of tort reform

    Well, I seem to have touched a nerve.  I’m getting a lot of email telling me I’m off the mark when it comes to tort reform.  Some of this email is coming from physicians who claim to usually agree with me.  You’re sure I’m wrong here.  You’re sure that tort reform (by which you mean setting caps on damages) really would reduce health care costs and make physicians practice differently.

    Unfortunately, most of you are coming at me with anecdotes.  So I’m going to lay out for you why I think that tort reform as you prescribe isn’t a guaranteed success.  I’m going to use data.

    Let’s start with Texas.  In 2003, Texas capped non-economic damages on malpractice lawsuits at $250,000.  It’s pretty much what they Republicans wanted to do with health care reform as well (see their plan).  In an op-ed in the Washington Post, 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.

    Well, that’s a fact we can check.  Did tort reform have any of these effects?  Here’s a handy chart from Public Citizen using data from the Dartmouth Atlas of Health Care (Selected Medicare Reimbursement Measures):

    That dotted line is when tort reform when into effect.  Not only were costs for Medicare enrollees not controlled, they  went up faster than the national average.  In fact, Texas reimbursement rates in 2007 were the second highest in the country.  What exactly did Governor Perry and Speaker Gingrich mean by “successful”?

    Maybe they were talking about health insurance premiums?  Were they controlled after reform?  Again, a handy chart using data from the Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey:

    Health insurance premiums again did not see a dramatic decrease after tort reform.

    Oddly enough, Governor Perry and Speaker Gingrich also claimed that Texas-style reforms “increased coverage”.  To check that you need only go to the US census:

    Do you see the increase in coverage?  I ask, because I can’t.  This claim is actually laughable, because Texas as a state has the highest level of uninsurance in the US.  Sometimes the Washington Post baffles me.  Is there any fact-checking at all?

    Some people believe – just know – that reducing malpractice awards will lead to fewer lawsuits which will lead to a reduction in premiums which will lead to a reduction in defensive medicine which will lead to a reduction in health care costs.  It’s a matter of faith.  It has to be, because there’s just not that much evidence it will happen.

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    • I appreciate these graphs a lot. It’s good to know damage caps definitely don’t work (maybe if they made the cap $250 instead of $250k?). But I don’t think most regular people who advocate tort reform are actually thinking so much about damage caps when they think of tort reform. They see things like the woman who sued McDonalds for 3million after spilling coffee in her own lap, and think she shouldn’t have been able to sue at all.

      Low caps might make lawsuit payouts less outrageous, but isn’t it the cost of litigating suits that shouldn’t have happened at all the real issue?

      Of course if there’s a payout cap there’s less incentive to facetiously pursue a frivolous lawsuit, but from their interviews on TV I think people like the mcdonalds coffee woman really do believe they’ve been wronged and will pursue the suit to the bitter end even if the potential payout is relatively low. Probably even if it’s only a couple thousand dollars.

      Are there any examples of things they’ve made legal or given businesses/service workers immunity on? and did that have an effect where these caps obviously haven’t?

    • a little background on that McDonald’s coffee lawsuit — not so frivolous, IMO.
      check it out:
      http://www.statemaster.com/encyclopedia/Liebeck-v.-McDonald%27s-Restaurants#Background_of_the_case

    • Yeah I’ve read about the case before (but also read your link) and I realize that the extent of her burns aren’t widely reported. I don’t really think that’s the point though.

      It’s a sad situation, but I still don’t think McDonald’s should be liable. If you spill coffee in your own lap, you’re the one at fault period. Therefore no one should be liable for it but you imo.

      If the cup had disintegrated or something then yes, the cup manufacturer should pay, but she spilled it herself as she tried to open it in her lap. Stupid.