When it became clear that Republicans were going to have to offer their own ideas on health care, if for no other reason than to show they are more than the Party of No, they put on their thinking caps and came up with four. One -- "Give states the tools to create their own innovative reforms that lower health care costs" -- is essentially meaningless. Another -- "Allow individuals, small businesses, and trade associations to pool together and acquire health insurance at lower prices" -- sounds like the exchanges established by the Democrats' plan, just in less effective form. And a third -- "Let families and businesses buy health insurance across state lines" -- is a spectacularly dumb idea that would bring all the humanity of the credit-card industry to health care.
But the GOP's final health-care proposal might actually end up happening. The Republican Party wants to limit people's ability to sue over medical malpractice, a cause known as "tort reform." President Barack Obama has said many times he supports the idea, as have some other Democrats. There are a number of ways one could go about tort reform, each of which has economic, medical, and moral implications. Before anyone accepts the Republicans' favored version, though, we should understand that their policy won't do what they say it will.
Let's deal with the economic question first, because that's the point from which tort-reform advocates usually begin. The argument goes like this: Jackpot jury verdicts cost too much money, driving up the price of malpractice insurance. Not only that, because of the fear of lawsuits, doctors engage in "defensive medicine," ordering unnecessary tests and increasing the cost of care. If we were to remove the incentive for people to file lawsuits, then malpractice-insurance rates would decline, and so would health spending. Half of the states have already done this, by capping "non-economic damages," which means damages associated not with lost wages or the cost of future care but with "pain and suffering." For instance, if a doctor commits some egregious kind of malpractice and injures you or kills a family member, the most you can sue for in pain and suffering damages is, depending on what state you're in, something like $250,000.
If big jury awards are a significant driver of medical spending, then restricting those awards should result in a dramatic reduction in medical spending. So has that happened in states with caps?
The answer is no. At last week's health-care summit, John McCain gave a glowing endorsement of Texas' experience with caps on non-economic damages, which were instituted there in 2003. The number of malpractice lawsuits has declined there, as have malpractice insurance rates. But has that led to a dramatic decrease in spending? Not even close. In fact, per-patient health-care spending in Texas has gone up at a rate oftwice the national average since the state instituted tort reform, and spending on diagnostic testing -- the kind of "defensive medicine" tort reform is supposed to eliminate -- has also gone up faster than the national average. So while tort reform in Texas has been good for malpractice insurers and good for doctors, it doesn't seem to have done anything for patients.
Does Texas' experience apply nationally? While there's no perfect way to quantify how much defensive medicine goes on, Harvard economist Amitabh Chandra estimates that the total cost of defensive medicine is around $60 billion per year. That's a large amount of money, but still only 3 percent of our nation's total health-care bill. Reduce it somewhat, or even significantly, and you've made only a small dent in overall spending. That's why when the Congressional Budget Office examined the issue, it concluded that a national cap on pain-and-suffering damages would have an impact on spending -- just not a particularly large one. "The combination of direct savings in malpractice costs and indirect savings in health care services would reduce national health spending in response to the proposed reforms by roughly 0.5 percent," the CBO reported.
Then we have the medical question. Malpractice lawsuits happen when malpractice happens. The discussion that comes from tort-reform advocates assumes that these lawsuits are largely "frivolous," but the truth is that thousands of Americans die every year as a result of preventable medical errors. An oft-cited 1999 study from the Institute of Medicine pegged the number at 98,000 per year. Last year an investigation by Hearst newspapers estimated the current figure to be 200,000 deaths per year.
These errors can result in lawsuits -- but usually don't. When the CBO looked at one year, 2003, they concluded that 181,000 severe injuries or deaths were caused by medical negligence. But only 17 percent of those injured actually filed a malpractice claim, meaning that five out of six patients who were injured by malpractice never sued.
Let's also keep in mind that a certain amount of "defensive medicine" is actually desirable, if it means fewer errors and better outcomes for patients. Tort-reform opponents often point to the experience of anesthesiologists. Because of the threat of lawsuits and high insurance costs, they successfully found ways to increase the safety of their practice, and the risk of death during surgery from anesthesia was reduced over 25 years from one in 4,000 to one in 250,000. That saved money, but more important, it saved lives.
Nevertheless, lawsuits are an extremely inefficient backstop against abuse, whether in medicine or any other area of our national life. Which brings us to the political context of this debate. For years, the GOP strategy has been to get people coming and going -- on the one hand, Republicans fight against the regulations that can prevent abuses from happening; on the other hand, they work to strip courts of their ability to punish those abuses when they occur. The keen interest Republicans have in medical malpractice is best explained by this fact: When a jury renders a large award, a trial lawyer makes money. And trial lawyers are significant donors to Democrats. Make large awards go away, and you cut off money to the Democratic Party.
This is standard political gamesmanship, but it affects people's lives. If you live in one of the states that cap non-economic damages, the state has said quite clearly that the value of your suffering, or even of your life, is a function of your income. It assumes that the life of a hedge-fund manager who died because of medical negligence is worth more than the life of a construction worker who died for the same reason.
As vulgar as that calculation is, it is unlikely to change. Nonetheless, there are alternative approaches out there: health courts staffed by medical professionals, "safe-harbor" for doctors who follow accepted guidelines for treatment, and an approach commonly referred to as "sorry works." In this system, doctors report errors immediately to the hospital, which then begins negotiating with the patient for compensation, instead of waiting to see if the patient files a lawsuit (in 2005, Obama and Hillary Clinton introduced a bill to promote "sorry works" systems around the country). The University of Michigan Health System instituted this system a few years ago, and it has seen malpractice suits plummet, all while patients get compensated for errors more quickly. The Michigan system also incorporates peer review to learn from the errors and make them less likely. Which is the point, after all -- not just to save money but to reduce the errors and abuse that give rise to lawsuits in the first place.
In a perfect world, no one would ever need to sue a doctor for malpractice. Until we live in that world, we should be wary of those who claim we can solve our health-care problems simply by taking away patients' right to be compensated when they get injured. That won't solve our medical spending problem, and it's likely to make patients less safe.