• The odd logic of tort reform – ctd.

    Some of you remain unconvinced.  You are sure that tort reform (capping damages) is at least the best way to get a handle on high malpractice premiums.  I started with Texas, so let’s move on to California.  I’d tell that story, but Kevin Drum already did it so well:

    We passed a law called MICRA in 1975 that limited noneconomic damages in malpractice cases to $250,000. Adjusted for inflation, that cap is now about the equivalent of $60,000. Nonetheless, its impact on malpractice premiums has been negligible. The chart below comes from the Foundation for Taxpayer and Consumer Rights, which definitely has a dog in the fight since it was founded by insurance industry scourge Harvey Rosenfield, who championed Proposition 103, an initiative that implemented state approval of insurance rates. It was passed in 1988.

    Still, the results are pretty clear. After 1975, malpractice premiums continued to zoom upward, rising at an even higher rate than in other states. But after 1988 (that’s the green line for easy reference), California premiums leveled off while rates in the rest of the country continued to rise. The reason for this is pretty simple: large damage awards are actually pretty rare and don’t make up a huge proportion of total malpractice payouts. Capping them changes the picture, but it doesn’t change it that much. But it does substantially cut into trial lawyer income.

    California’s capping damage awards in 1975 did little to decrease malpractice premiums in California over the next 13 years.  However, allowing government regulation of insurance premiums since 1988 seems to have done quite a bit to keep rates from rising.

    So why are so many of the physicians writing me clamoring for the former and not for the latter?

    • Well, if we are going to be evidence-based about it:


      “In this paper we present the costs of defensive medicine in thirty-five clinical specialties to determine whether malpractice liability reforms would greatly reduce health care costs. Defensive medicine includes tests and procedures ordered by physicians principally to reduce perceived threats of medical malpractice liability. The practice is commonly assumed to increase health care costs. The results of studies of the costs of defensive medicine have been inconsistent. We found that estimated savings resulting from a 10 percent decline in medical malpractice premiums would be less than 1 percent of total medical care costs in every specialty. These savings are lower than most previous estimates, and they suggest that the presumed impact of tort reform on health care costs may be overstated.”

      Essentially, through reduction in capping non-economic damages, premiums go down without proportional reduction in medical costs, Even if one is to assume the investigators are off by a factor of 5, we are still talking minimal effect.

      Again, if there is something better, more current out there, lets see it (neutral source of course, non AMA–and I am a member)


    • AP – Saying ‘sorry’ pays off for U. of Michigan doctors

      “…The willingness to admit mistakes goes well beyond decency and has proven a shrewd business strategy, according to a 2009 article in the “Journal of Health&Life Sciences Law” by Boothman and four colleagues at the Ann Arbor school.

      According to Boothman, malpractice claims against his health system fell from 121 in 2001 to 61 in 2006, while the backlog of open claims went from 262 in 2001 to 106 in 2006 and 83 in 2007. Between 2001 and 2007, the average time to process a claim fell from about 20 months to about eight months, costs per claim were halved and insurance reserves dropped by two-thirds. …”

      tell REASONABLE people the truth, you’ll get results.

      this is why it is called “the ‘practice’ of medicine.” nobody is perfect. even doctors make mistakes. they are human. MOST people accept that.

    • ” We found that estimated savings resulting from a 10 percent decline in medical malpractice premiums would be less than 1 percent of total medical care costs in every specialty.”

      Wrong metric. This is an emotional issue as much, if not more, as a financial one. Cut rates in half, and people wold still fear getting sued. Most of us know that docs are not great business people. Most of us in the trade realize that money is not the only or even primary motivator. If you have not done so, please see this awesome Youtube.


      Anyway, I would not expect a decrease in malpractice to effect much of a change. As Aaron pointed out below, it is hard to reduce the fear factor. While I agree that the directly measurable costs are not there to be found yet, I would submit that this may be kind of like mortgage models. After all, everyone knew, and had data to prove it, that housing prices could not fall everywhere at once. Yes, it is anecdotal, but I can tell you that a day seldom goes by w/o someone talking about defensive medicine decisions they have made. Rather than caps, I would suggest the following.

      1) Malpractice courts modeled on tax courts. If you, as a doc, knew that you were not facing a crap shoot where your fate was decided by a judge who does not understand the issues, and 12 people who couldnt get out of jury duty, it would reduce the fear factor I believe.

      2) Venue laws. Make sure that trials are not dragged off to some big city far away with hanging judges and juries.

      3) Experts need to be experts. There need to be some qualifications to be an expert. Judges should be empowered to not allow non-experts the ability to testify.

      I also like the Michigan plan.

      Query- Is there any evidence that malpractice improves the quality of health care?


    • Guys, have you forgotten these posts?