A Solution In Search Of A Problem
Categories: Health policy, Economic Theory, False Consciouness
Tags: Lower than lawyers
Now Wonks Anonymous realizes that a sizable minority of the population believes that the cost of malpractice insurance and the fear of malpractice suits is a major driver in rising medical costs. The cure for this, we are told is limitation of non-economic damages from malpractice suits.
We do that here in California where non-economic damages are limited to $250,000. The results can be seen in an excellent piece of reporting by Victoria Colliver in the SF Comical. The results of the law:
A 2004 Rand Corp. study found the law has cut payments to plaintiffs who win at trial by 30 percent. The study, based on an examination of cases between 1995 and 1999, found that plaintiffs received about 15 percent less overall due to limits on attorney fees.
Nicholas Pace, a researcher with the Rand Corp. who led the study, said there hasn't been enough unbiased research conducted to determine whether California's medical malpractice law has had a direct impact on health care costs in the state.
"It's hard to make a strong persuasive link between medical malpractice reform and significantly changing the amount consumers pay," he said.
Now if a 30% drop in trial awards sounds big, remember that medical malpractice suits are infrequent events. Suits that go to trial are even more infrequent. Most doctors never have one. A thirty percent savings on a rare event is small indeed.
And of course the savings comes entirely out of pain and suffering awards. Awards for lifetime medical care and lost earnings still remain. One of the major causes for large malpractice settlements is the need to provide lifetime medical care for a person whose health has been ruined by medical malpractice.
Medical care is not cheap and we, as a society, have decided not to provide for lazy unproductive paraplegics and other malingers who would not have suffered misfortune if they were good with God. This leaves the victim of medical malpractice with no recourse but the courts and the well established body of Anglo-Saxon tort law.
Wonks Anonymous must note here that the proponents of market magic - the same proponents who are also firmly opposed to government regulation and policing of professions - are also vehement in their opposition to lawsuits.
Indeed lawsuits are a fine traditional method designed to keep economic actors honest. If someone defrauds you, or injures you, or fails to perform on a contract you and your lawyer can bring the suit before a jury of your peers without the intervention of any government functionary or bureau. No complex rules and regulations here. Just the wisdom of the people.
Which wisdom must receive lip service from all our right wing populists who need to keep the sheep coming to their tea parties. At the same time tort reform, which restricts the power of juries and helps the important people who sign the campaign checks, is promoted as the essence of popular democracy.
What do they teach them in these schools?
The trouble with tort cases is the inherent desire of humankind to "provide" for those damaged--often without regard to the true causation of the injury. Yes, the plaintiff has suffered an injury (let's say a birth defect), but was it the fault of the OB-GYN, drug maker, or a genetic roll of "snake eyes?"
Plaintiffs' lawyers know juries dislike drug companies and/or large corporate entities and exploit it (as well as the known costs to defend even a meritless suit) to achieve settlements, which may account for the relatively low number of trial cases cited. 98% of all litigation does not end in a trial. If a CFO/CEO knows a trial will cost upwards of $200k, and the plaintiff is a particularly sympathetic individual (little white girl), irrespective of fault, it's easier to go with the certainty of a settlement than risk assessment of a seven or eight figure judgment.
Although not a med malpractice case, the recent Louisville Slugger case in Montana is illustrative. There, an 18 year old pitcher gets hit on the head with a line drive from an aluminum bat and dies. Parents sue alleging the maker of the bat made a defective product and failed to warn of its dangers (aluminum bats accelerate the baseball faster than wood bats). Jury denies the defective product claim, but awards $850k for lost income/pain and suffering. Tragedy for sure, but do you really think a warning on a bat would have made a difference? (It is highly unlikely the parents would not have pulled their kid from competition.) This award explains why we have a myriad of silly warning label affixed to everyday products--such as those telling us not to use toasters and hair dryers in the bath tub!)
The article that references the RAnd study also mentions that CA malpractice premiums are lower, at least in part because of the damage cap. If premiums go higher, more physicians will leave high risks practices or relocate out of state, neither of which is good for medical services consumers left behind.
Med Malpractice also awards implicitly result in over testing and treatments by physicians. When someone sits over your shoulder after-the-fact and suggests you "could have done more," you need to build a paper trail to defend yourself. Hence, more tests are ordered than are medically necessary, and either you, the gov't or your insurance ends up paying for these unnecessary tests. (In the case of insurance, we ALL end up paying higher premiums even if we do not use our plan that year.)
No system is perfect and ours has problems. Allowing uncapped medical malpractice claims to proceed will not fix those problems. Because the $250k damage cap has not been increased in 34 years, an upward adjustment may be warranted. However, any increase should be accompanied by an attorneys' fees clause. If the concept of "loser pays" is introduced into the equation, both parties would have an incentive resolve the matter before reaching trial.
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