Tort reform missing: $100 billion reward if found

February 16, 2010
Jason N. Itri, MD, PhD

There has been considerable debate concerning President Obama’s healthcare reform initiative despite widespread agreement the U.S. healthcare system is in need of a significant and comprehensive overhaul.

There has been considerable debate concerning President Obama's healthcare reform initiative despite widespread agreement the U.S. healthcare system is in need of a significant and comprehensive overhaul. President Obama's goal to reduce long-term growth of health care costs is one of the most important features of any proposed legislation, but the president and his Democratic party have uniformly overlooked a critical component of comprehensive and cost-conscious health care reform–tort reform.

For anyone not familiar with the term ‘tort reform,' it refers to proposed changes in the civil justice system that would reduce tort litigation or damages. Tort is a system for compensating wrongs and harm done by one party to another's person, which includes medical malpractice. The costs of medical malpractice and defensive medicine contribute significantly to the staggering amount of money this country spends on health care, estimated at $2.4 trillion annually.

A study by Kessler and McClellan published in 1996 evaluated the impact of defensive medicine attributable to lawsuits. They examined the cost of treating hospitalized heart patients in states that have caps on damage awards and other restrictions on malpractice suits compared to the costs of treating similar patients in states without litigation restrictions. Their conclusion: malpractice reforms that directly reduce provider liability pressure lead to reductions of 5% to 9% in medical expenditures without substantial effects on mortality or medical complications.

In 2004, Pricewaterhouse Coopers concluded approximately 10% of the costs of medical services are attributed to the cost of litigation–2% related to the direct costs of lawsuits and 5-9% related to the practice of defensive medicine. Additionally, the PWC report stated reasonable caps on non-economic damages such as pain and suffering have been shown to improve patient access to affordable care and reduce costs associated with the practice of defensive medicine.

The idea tort reform could result in significant financial savings for the American healthcare system is supported by multiple large-scale studies assessing the affect of state-level tort reforms enacted in the 1980s. The Congressional Budget Office concluded a number of these studies found state-level tort reforms decreased the number of lawsuits filed, lowered the value of insurance claims and damage awards, and increased insurers' profitability as measured by payouts relative to premiums in the short run.

Most physicians are well aware of how the absence of meaningful tort reform can affect the practice of medicine. The skyrocketing cost of malpractice premiums in the field of obstetrics over the last decade has forced many obstetricians to stop practicing obstetrics, refuse to care for high-risk pregnancies, or leave the state. Several insurance carriers no longer provide liability insurance for obstetricians, and hospitals have closed their obstetrics wards due to significant debts incurred from malpractice insurance. The end result is many women have inadequate access to obstetrical care and may have to travel several hundred miles to obtain specialty care.

It was President Obama himself who said, "Anyone who denies there is a crisis in medical malpractice is probably a trial lawyer," during the Illinois State Senate race. So why isn't tort reform included in President Obama's comprehensive health care reform agenda?

While many differing opinions and explanations exist, I prefer to start with campaign contributions.

According to the Federal Election Commission data regarding campaign donation from legal industry to presidential candidates, President Obama received $43 million in campaign donations from lawyers and law firms, almost 50% of all dollars from the legal industry and more than 10% of his overall campaign donations. President Obama received almost three times more than Hillary Clinton, the next highest candidate on the lawyers' bankroll. Two-thirds of all legal industry dollars went to Democrats Obama and Clinton last year, highlighting a well-known fact trial lawyers associations representing plaintiffs' lawyers are major contributors to Democrats. This relationship is more popularly known as a "conflict of interest."

While tort reform is not the answer to all of our healthcare-related spending problems, it is a significant issue that can't be ignored any longer if this country is going to embrace true healthcare reform. It is time to let our representatives, senators and president know healthcare reform is not comprehensive unless it includes meaningful tort reform.

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