• How malpractice reform is blown way out of proportion

    Among the unsurprising and uninspired provisions in yesterday’s ACA “replacement” proposal, you’ll find a predictable nod to tort reform as a means of spending control.

    Let’s not mince words: defensive medicine inflates health spending, but tort reform is a snake oil cure. We know that physicians with higher malpractice premiums behave pretty much the same as those with lower malpractice premiums. We know that the GOP proposal mirrors malpractice reforms in Texas—reforms that had no meaningful impact. Ditto for California. We know that our system builds in economic incentives for providers to over-treat, independent of litigation concerns.

    What’s more: malpractice claims are incredibly uncommon. From the universe of people who could bring valid complaints of negligence, only two percent do; only a fraction of those result in payment, often through settlement. The chart below is adapted from a legal casebook (I tweeted a photo of the original here).


    That last bar might be a little confusing: only about 2% of patients who suffer negligence bring claims; they make up the blue area on the right. They’re outnumbered by claims that are frivolous or of uncertain merit (the gray area). Still, that means the number of claims filed is about 10% of what we’d see if every legitimately injured patient filed suit. And fewer than half of filed claims are paid—our current tort system sees malpractice payment for <0.05% of hospitalizations when 1% of hospitalizations could theoretically foster valid complaints.

    The relevant casebook excerpt:

    In any medical encounter, there is a considerable chance of a disappointing outcome. However, most of these poor results are the unavoidable consequence of the disease itself and the inherent limits of medical science. Of all hospital admissions, only about 4 percent involve an injury caused by medical treatment. Of these, only about one-fourth (1 percent of the total) are the result of substandard care. Only about 2 percent of negligent injuries result in claims being filed with insurers. In part, this is because the great majority of these injuries are temporary or minor. Importantly, however, most claims are for injuries not caused by negligence.

    Some interesting evidence suggests that we could actually alter physician behavior if states changed “standard of care” laws to reflect national norms instead of “local” norms (read Nick Bagley’s take on that). That’s something I’d be interested in seeing more of, but it has to take place at the state level.

    The GOP proposal—capping damages, restricting attorney fees—is small ball, because malpractice litigation isn’t as big a problem as it’s perceived to be.

    Adrianna (@onceuponA

    • I think what is missing from this is the argument that the cost of malpractice insurance premiums justify high prices for physician fees. When people argue to reduce certain physician fees and therefore reduce physician pay, the counter often is 1) education costs of being a physician (loans), and 2) cost of malpractice insurance. This addresses that the number of claims are low, but it doesn’t address the proportion of the doc’s income that goes to malpractice insurance. I think illustrating that last point would be helpful in convincing those who still believe malpractice reform is a higher priority than other reforms.

      • What business does Peter Orszag have in deciding how doctors performance should be measured?

        If we are judging performance then Peter Orszag shouldnt have a job anymore. His economic “estimates” as the OMB director were proved wrong by orders of magnitude. He’s the FIRST guy in line to be weeded out by “quality control”

    • Adrianna’s post unfortunately ignores the fact that we already know what effective malpractice systems look like (e.g., New Zealand, the UK, any developed country essentially) and the commonality between them is that they all are much more restrictive about lawsuits than the US systems (including Texas’s post malpractice “reform”).

      In other words, most of the post argues that reforms to the system don’t work (or won’t work) when in fact, serious reform has not been tried due to the power of the trial lawyer lobby (and their sympathizers). Texas’ caps on punitive damages are laughably weak compared to the effective no-fault systems in place in New Zealand (to name one example) that almost eliminate litigation risk, compensate those that have been harmed and eliminate trial lawyer profiteering from the system. If Adrianna was really confident about her data, she would use international comparisons with other advanced systems (much as we do for outcomes, etc. in other health care reform areas) but I think she knows that we are a terrible outlier in terms of malpractice.

      Lets call out this post for what it is–an attempt to justify a terrible system that helps only plaintiff’s attorneys.

      • Gee, I took you up and looked for some info on New Zealand and this is what I found: “A few other major concerns about New Zealand’s no-fault system, however, remain unresolved, the authors say. First, many observers believe the compensation levels are inadequate, particularly for patients who are not employed at the time of their injury and are unable to claim earnings-related compensation. Second, compensating treatment injuries, but not other forms of illness, can produce tensions, since ACC assistance is higher than that available through the health and welfare systems.

        Finally, and most importantly, the system has not fully realized potential gains in patient safety. Thirty years after the implementation of the ACC, New Zealand hospitals are no more or less safe than those in other Western countries—falling midway between the levels recorded in Australia and the United Kingdom—two countries with similar medical practices. While the recent reforms are expected to create a culture of learning, the process of making health care safer cannot be achieved through medical and legal reform alone, say the authors.” http://www.commonwealthfund.org/Publications/In-the-Literature/2006/Feb/No-Fault-Compensation-in-New-Zealand–Harmonizing-Injury-Compensation–Provider-Accountability–and.aspx

        So, you proposal is to create a system that pays the injured less and does not increase patient safety. Gee, where can I sign up?

        We have such a system in the US; it is called worker’s compensation and it is a bloody nightmare. I know. I did some wc claims. You want a nightmare? Spend a day at your local worker’s comp tribunal. You will finally realize the beauty of Kafka. WC does EXACTLY what NZ’s system does- pays people less than the value of their injuries and does nothing to reduce employer negligence. It was proposed as a way to get people paid quickly without suing except in rare circumstances. It is a disaster.

        The only reason it is still around is employers love it. They get to pay less, do harm, and pass things off on their employees. The only system that will increase patient safety (which should be the goal) is to eliminate problem doctors. Unfortunately, that is well nigh impossible to do. even killing and maiming patients does not get docs’ licenses revoked until it is too late.

        How many dead and/or severely injured patients are necessary to change the doc protection system?

        (And for the record getting rid of awful/harmful layers is just as hard. I personally have seen my fellow layers reported for horrible actions and not one was removed. It is all too rare. Why? The professions (doc/lawyers) are too powerful and they want their ‘right’ to practice removed rarely.)