More Evidence That “Tort Reform” Does Not Lower Health Care Costs
Tuesday, June 26th, 2012
In the last post we looked at how state legislatures continue to place restrictions on personal injury lawsuits, or “tort,” because high-paid lobbyists from many industries and interest groups tells them that tort reform will have a wonderful effect on the state’s economy. But time and time again, experience and independent studies say otherwise.
For example, legislators are told that putting limits on medical malpractice lawsuits will lower health care costs. This has been a grand theory of conservatives for many years. Even today, “malpractice reform” is a major plank in the Republican Party’s plan for replacing “Obamacare.” But the plain truth is that states that have reformed “tort” to protect physicians from malpractice suits are not seeing any savings.
When tort laws are “reformed,” nearly always the law puts a cap on the amount of damages a plaintiff may receive, no matter how catastrophic his injuries. Those hurt the most by tort reform are those that are most injured, such as people who suffer mesothelioma from exposure to asbestos.
No state has been more enthusiastic about tort reform than Texas. To this day, state government officials and members of the Texas medical establishment swear up and down that tort reform has lowered health care costs and attracted more doctors to the state. And they dredge up all kinds of numbers from some mysterious source to prove their case.
Recently an independent study debunked the claim that tort reform had reduced the physician shortage in Texas. Now another independent study has shown that protecting physicians from medical malpractice suits has not relieved Texans of health care costs.
The researchers, including University of Texas law professor Charles Silver, looked in particular at the effect of a 2003 constitutional amendment in Texas that limited the amount of awards to malpractice plaintiffs. Backers of this amendment promised Texans that capping damage awards would lower Texans’ health care bills.
Silver’s group looked at Medicare spending between 2002 and 2009. The researchers found no reduction in physicians’ fees, even though the number of malpractice suits filed in Texas was significantly reduced. Physicians did see a reduction in their liability insurance premiums, but this savings was not passed on to patients.
Most of the analyses that predict malpractice reform will reduce health care costs are based on the “defensive medicine” theory. This theory says that physicians routinely order more tests and procedures than are necessary because they want to have all their bases covered in case they are sued.
Surveyed physicians have reported that as much as 25 percent of the procedures they order are defensive. Bean counters have extrapolated from this that “defensive medicine” results in $2 billion a year in unnecessary medical costs. In theory, laws restricting medical malpractice suits and damage awards would result in fewer unnecessary procedures and lower health care costs.
But the researchers found that in Texas, malpractice reform has made no difference in the amount of tests and procedures doctors ordered. They also compared physicians in counties that had the most malpractice suits before “reform” — usually urban areas — to physicians in counties with the least malpractice suits. “If tort reform reduces spending, it would have the biggest effect on high-risk counties,” Professor Silver said. But data showed no reduction. If anything, urban physicians were ordering more tests and procedures after reform than before.
So what happened to “defensive medicine”? One can only conclude that, for some reason, physicians are exaggerating when they claim they order so many procedures just to be “defensive.” And politicians need to understand that protecting physicians from malpractice suits is not a magic bullet to lower health care costs.
