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CBO Predicts Modest Savings From Medical Malpractice Reform


Sen Orrin Hatch (R-UT)

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In response to an inquiry by Sen. Orrin Hatch (R-UT), Congressional Budget Office chief Doug Elmendorf finds that medical malpractice reform would reduce the deficit by about $54 billion over 10 years.

"Combining the effects on both mandatory spending and revenues, a tort reform package of the sort described earlier in this letter would reduce federal budget deficits by roughly $54 billion over 10 years," Elmendorf writes. That $54 billion is comprised of an expected $41 billion reduction in mandatory spending, and about $13 billion in new revenues.

And just what sort of statutory changes would be needed to generate the reduction?


  • A cap of $250,000 on awards for noneconomic damages;
  • A cap on awards for punitive damages of $500,000 or two times the award for economic damages, whichever is greater;

  • Modification of the "collateral source" rule to allow evidence of income from
    such sources as health and life insurance, workers' compensation, and automobile
    insurance to be introduced at trials or to require that such income be subtracted
    from awards decided by juries;

  • A statute of limitations--one year for adults and three years for children--from
    the date of discovery of an injury; and

  • Replacement of joint-and-several liability with a fair-share rule, under which a
    defendant in a lawsuit would be liable only for the percentage of the final award
    that was equal to his or her share of responsibility for the injury.
  • A bit of good news for Hatch, though it comes after Republicans have spent two days diminishing the importance of CBO findings, after the agency determined the Senate Finance Committee health care bill would be a deficit reducer.

    Obama announced plans to begin experimenting with tort reform at the state level during his health care speech to Congress last month.

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    18 comments

    Recommend Recommend (1)

    October 9, 2009 12:08 PM   

    tort reform. An issue for corporations. I find it disgusting.

    are “frivolous lawsuits” the real cause of high health care costs? The short answer is no. Malpractice costs represent less than half of 1% (0.46 percent of total health care expenditures) and malpractice settlements have grown modestly with inflation. In fact, in states that have adopted caps on jury awards, doctors are prescribing too many aggressive and intensive treatments that increase costs, but don’t improve outcomes.

    When Texas capped non economic medical malpractice damages to $250,000 in 2003, most conservatives argued that the reform would free doctors from having to prescribe unnecessary treatment. It didn’t happen. According to the Dartmouth research on disparities in health care spending, many Texan doctors are still prescribing aggressive treatments that don’t improve outcomes. In fact, as of 2006, Texas was still at the top of the list of high-spending states.

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    October 9, 2009 1:43 PM    in reply to Indie Pro

    "When Texas capped non economic medical malpractice damages to $250,000 in 2003, most conservatives argued that the reform would free doctors from having to prescribe unnecessary treatment. It didn’t happen."

    Exactly, which is why the concept of 'defensive medicine' is a myth. Doctors love to answer surveys that they practice 'defensive medicine' because it offers the perfect shield hide their 'economic medicine' excesses.

    My comment thereon: http://tpmcafe.talkingpointsmemo.com/talk/blogs/trblmkr/2009/09/defensive-medicine--the-imposs.php

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    October 9, 2009 2:02 PM    in reply to trblmkr

    Exactly right. The problem of health care uberinflation is not "defensive medicine," the problem is OFFENSIVE medicine: doctors referring their patients to imaging centers, labs, physical therapy clinics, etc., of which they are owners.

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    October 9, 2009 3:23 PM    in reply to Cal Gal

    BINGO! This is the unspoken story in the whole health care issue. Everyone goes after the insurance companies because they're an easy target - they make obscene profits while making reprehensible decisions to cut off payment for critical care. But the fact is that a big part of health care costs is that doctors are ripping off everyone, patients and insurers alike, for unnecessary charges.

    Example: I'm a pretty healthy 35 year old male and went to the doctor for a regular appointment last week. Some automated blood pressure gauge gave a wacky reading (a regular cheap hand pump gave a normal one, another example of wasteful spending). After that, the nurse brightly said "When was the last time you had an EKG? It's really quick." Figuring it was unneeded but not a big deal, I said okay. She slaps some electrodes on and after 20 seconds it's done, all normal. I ge the bill and on top of $234 for the appointment itself, is $89 for the EKG. WTF?

    All this crap slips through under the radar because the insurance companies don't police small stuff and we treat it as "free" because we only pay a small copay. But it inflates our premiums, and the insurance companies cut off bigger, important things to cut corners.

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    October 11, 2009 9:26 AM    in reply to midnight rambler

    Instead of fighting the insurance beast, why not establish "whole body" federal diagnostic clinics, where you go in the front door with an ailment and leave later with a comprehensive diagnosis.

    How many times have you gone to the doctor and heard "your lab tests will be ready in a few days?"

    PUT ALL THOSE EXPENSIVE LABS AND CLINICS under ONE ROOF! And hire the interns who have proven a propensity for proper diagnosis to staff them.

    What every one here is talking about, doctors sending patients to clinics and labs that those doctors are part-owners of, is the biggest cost of medicine. That and prescribing unnecessary drugs they are also invested in (particularly antibiotics) constitute not only a majority of the expense, but a serious conflict of interest that promotes bad medicine.

    Federal and state funded diagnostic clinics, with all basic the lab work done on-site, would girdle that greedy run-around treetrunk. But just like the insurance companies have fought desperately via lobbying and bribes to protect their huge piece of the healthcare pie, so will those run-around clinics and their investors battle to preserve their status quo.

    If we spend tax money on anything relating to the healthcare industry, it shold start with FREE, efficient and reliable diagnostic clinics.

    nd keep in mind, these clinics wouldn't actually TREAT the ailments, the results of the diagnosis would be taken to the family doctor, who would act on the information provided.

    This would assure that the clinics would have very little liability, malpractice suits against them would be extremely rare, because these clinics would not administer drugs or even prescribe them, they would simply determine what the ailment really is, without the hig-dollar runaround.

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    October 11, 2009 2:29 AM    in reply to Indie Pro

    Then how do you address the cost of insurance doctors have to pay to protect themselves from malpractice. This is the underlying issue that creates a burden on doctors financially and reducing this will allow doctors to become more independent and could help with quality of care. Doctors are still over treating people because of the pay structure. I am as skeptical as you are to reducing people's ability to get their day in court but insurers need predictability.

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    October 9, 2009 12:19 PM   

    From a public policy perspective, if we ever actually achieved universal coverage, I would be for the aboltion of the collateral source rule, but only if it is accompanied by an abolition of the right of the insurer to put a lien on judgments.

    The rest of it is just a "get out of consequences" card for lousy doctors and their enablers in the profession who refuse to yank the licenses of the small percentage of doctors who are responsible for very large percentage of awards and settlements. When the medical profession starts doing half the lousy job that mine does in policing itself, they can start talking about the need for medmal reform.

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    October 9, 2009 3:37 PM    in reply to The Commenter Formerly Known as NCSteve

    I agree. As we move toward universal coverage and government health care medical malpractice constraints are inevitable and probably beneficial. In fact, I won't be surprised if Obama throws in some medmal reform before signing the HCR bill. Just to mess with the Republicans' heads.

    He's smart like that.

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    October 9, 2009 12:56 PM   

    Shorter: Republicans want to reduce accountability and increase innovation. Worked well with financial regulations right? It didn't lead to an increase in dangerous products or conditions for the public did it? Well, at least we're not bailing anyone out...even if they were the victims of wrongful actions. Oh, if they don't recognize the full extent of their injuries before the statue of limitations sucks to be them.

    I'm not entirely against caps, just think they are better set through precedent.

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    October 9, 2009 2:11 PM   

    In short, if we completely gutted the malpractice system, and by some enormous stroke of luck this did not act as an incentive to reduce quality of care, health care spending might be reduced by one quarter of one percent.

    Of course, the shorter statute of limitations might lead to more suits being filed, just in case. And meanwhile the limit on non-economic and punitive damages gets us back to the old situation where turning the life of someone old or poor into a living hell costs a doctor or hospital way less than, say, impairing the ability of a derivatives trader to to buy and sell within a 30-second window.

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    October 9, 2009 2:50 PM   

    $750,000. That should be enough if a doctor takes out the wrong kidney or lung. That should easily get you through your remaining months.

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    October 9, 2009 2:58 PM   

    So if you lose an eye, a limb, etc. or god forbid a spouse or child, because of a doctor's error, is $250,000 a good replacement?

    "Oops, sorry your child is dead because we administered the wrong drug. Here's 250K for your trouble."

    Specialists can make that in a fucking year.

    How about we try this instead: Stop the collosal idiocy where doctors and hospitals can't do their job without killing and maiming people. We have something seriously wrong where hospitals have to use magic marker to mark off which leg is going to get knee surgery, because otherwise they might operate on the wrong one. (no joke!) People get MSRA because doctors and nurses don't wash their goddamn hands before going from one patient to the next.

    How about transparency where EVERY SINGLE SCREWUP is published in a big public database, so patients can know not to go to Murderous Doctor Idiot for that surgery. As it stands now, hospital/doctor's rights to have their performance deliberately covered up is the rule.

    These goddamn republicans -- always side wih the rich and powerful over the victims.

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    October 10, 2009 12:53 AM    in reply to AnswerFrog

    Transparency is good, but it's got to be done in a way that's both accessible and easily interpreted - are mistakes being made because those making them are lax, or are they because they're struggling to keep up with workload, for example.

    Here in New York, they've got a ranking system for thoracic surgeons, so people can check to see what kind of success rate their doctor has, and if they feel uncomfortable, opt for a different doctor. The result? The best surgeons in the state rank lowest... because when someone else gets a case where the patient has a slim chance to live, they send him/her to the surgeons who give them the best chance... so they doctors that doctors trust most end up with the most deaths, because they're the only ones really taking on the risky surgeries.

    Yes, that can be corrected by talking to your doctor about why they're referring the guy w/the lower rating, but not everyone will do that. So while yes, definitely transparency, we should also have a thought to making sure the presented data isn't misleading without explanation.

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    October 9, 2009 3:41 PM   

    Tort reform is class warfare by the rich against the rest.

    If a rich man is injured by a doctor, he would still be able say, "I'd have made millions without that injury, so I'm owed millions."

    But the rest of us would be denied justice.

    Senator Sen. Orrin Hatch only asked about limiting non-economic damages, and not economic damages.

    Because like most Republican Senators, he is a pawn of the rich.

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    October 10, 2009 10:53 AM    in reply to Eric Jaffa

    This is soooooooo true. It is irrefutable. That is what the results are in our tort system. After the rich steal or inherit their wealth, their primary concern in life is how to keep that wealth and that means keeping it out of the hands of those they have harmed.

    Every notice that in civil suits against corporations for tortious behavior that the CEO's, the top management rarely reach into their pockets to satisfy judgments against the corp?

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    October 9, 2009 4:13 PM   

    tort reforms? does that not have to do with attornies? hatch needs to give it up. why did he on the one hand say the cbo means nothing and then go to them for a inquiry?

    oooh, yes! health reform is about to be passed and he is looking for something to slow down it's passing-again. won't work!

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    October 9, 2009 4:28 PM   

    The whole 'tort reform' mantra is a headfake. As illustrated in the comments above, it has already been instituted in numerous states, and has done little to either reduce costs due to 'defensive medicine' (read: doctor income) or medmal judgments (read: justified and necessary costs of caring for those who've been injured through medical error). And let's not forget that the main reason for the huge hikes in med-mal insurance in the past decade had more to do with bad investments by the insurance companies than oversized judgments by plaintiffs.
    Still, the repubs keep coming back to this well, not because it reduces costs in any appreciable way, but because it's one variety of shiny object that has not yet been completely debunked. All the more reason to keep smacking down any suggestion that denying injured patients compensation will somehow cause our insurance bills to drop.

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    October 11, 2009 8:47 AM   

    Any bill that is produced that does not include real tort reforms can not be taken seriously. At this very moment, on the cover of the Tampa Bay Yellow Pages, there are three different advertisements for three different malpractice firms. JUST ON THE COVER! On my way to work, I see SIX roadside billboards, advertising the services of malpractice attorneys. This along a four mile stretch of northbound 275. If you don't think physicians think about these things, you are wrong. I know I do. I know my colleagues do. What a shame. You can bet I am going to order every test in the book to CMA with little regard to the cost. I am not about to give away what took me over a decade and a half to earn. Not a chance. The arguments against real tort reforms are old, tired, and stopped holding water a long time ago.

    Christopher Russo, M.D.
    University of Michigan Medical School '94

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