Tort reform savings challenged
Photo/Tim Greenway
William Thomas, a professor at the Muskie School of Public Service at the University of Southern Maine, agues in a new study that a reduction in medical malpractice premiums would have a much smaller impact on health care costs than widely believed
A new study from the Muskie School of Public Service at the University of Southern Maine throws a wrench into the notion that defensive medicine — the practice of ordering marginally useful or unnecessary tests and procedures to protect health care providers from medical malpractice lawsuits — substantially increases health care costs.
Defensive medicine is a central theme in debates in Washington, D.C., and Augusta over tort reform and its impact on health care costs. Proponents argue that tort reform leads to fewer frivolous lawsuits, which leads to reduced liability for physicians, which leads to reduced medical malpractice insurance premiums. The result, proponents say, is lower costs for physicians and, therefore, smaller medical bills for patients.
But William Thomas, a professor at the Muskie School and lead author of the study “Low Costs Of Defensive Medicine, Small Savings From Tort Reform,” recently published in the journal Health Affairs, says a reduction in medical malpractice premiums, a goal of tort reform, would have a much smaller impact on health care costs than previously believed.
Thomas began his research in 2005 after listening to presidential debates in which George W. Bush cited tort reform’s savings at more than $100 billion a year. Thomas thought that figure a bit high, but found a lack of comprehensive or consistent studies to substantiate his theory. Many of the studies looked at just one specialty, such as obstetrics or neurology, both well known for their exposure to malpractice claims. Thomas thought a more comprehensive study was needed. “To be able to estimate the costs, I needed to look across the medical spectrum and look at all conditions,” he says.
Thomas’ research — utilizing CIGNA’s national malpractice claims database and data on physicians’ malpractice premiums in 30 states — looked at correlations between malpractice premiums and defensive practices across 35 medical specialties. His findings surprised even him. A 10% reduction in medical malpractice premiums would result in a reduction in defensive medicine equal to 0.13% of total health care costs, according to the study. “We were surprised by just how small it really was,” he says. “The figure Bush had been citing in the 2004 debate was 5% to 9% of medical expenses.”
The issue of cost savings from reducing defensive medicine was prominent during last fall’s health care reform debate and is a platform now in the Republican “Pledge to America.” Some Republicans maintain that instead of financing the expansion of health insurance by taking money from Medicare programs, billions could be saved by passing tort reform, says Thomas. “What this study says is there’s really not that much money being saved by doing this.”
Other recent studies have similar results. Last fall, the Congressional Budget Office issued a report estimating cost savings from comprehensive tort reform would be 0.5% of national medical expenditures, says Thomas. Also, in the same issue of Health Affairs, a second study, by researchers at the Harvard School of Public Health, found total medical malpractice-related costs were $55.6 billion (80% of which came from defensive medicine), or about 2.4% of annual health care spending.
There’s a big difference between the CBO’s result of 0.5% and the Harvard study’s result of 2.4%, Thomas points out. However, he says if the Harvard researchers had used his defensive medicine estimates, their study would have placed medical malpractice’s total costs at around 0.6% of total health care costs — much closer to the CBO’s estimate.
Thomas says his study should not be used to discount the viability or usefulness of tort reform. “Does our analysis suggest that tort reforms such as caps on damages and limits on attorneys’ fees should not be enacted? No, because even this small level of extra cost should be eliminated from the system,” Thomas writes in the study’s conclusion.
Several states have already enacted limited tort reform. In the 1980s, Maine set up pre-litigation panels to review medical malpractice lawsuits before they got to court to determine their merit. That has helped reduce frivolous lawsuits, says Gordon Smith, executive vice president of the Maine Medical Association, which represents physicians and health care providers in the state. The MMA has pursued another element of tort reform — capping awards for non-economic damages, such as pain and suffering — but has not succeeded in getting it passed.
Not so cut and dry
Not everyone shares the view that the cost of defensive medicine can be quantified. “I think it’s nearly impossible,” says Terrance Sheehan, CEO of Medical Mutual Insurance Co. of Maine, which insures 2,500 physicians in the state, roughly 60% of the market. “I don’t question [defensive medicine] happens, but I’m not sure anyone can measure it.”
Sheehan, a former pediatrician, believes a physician’s care for a patient is too complex a relationship to tease out what procedures are ordered with the welfare of the patient in mind, and which, if any, are ordered to reduce exposure to lawsuits. He does agree, though, with the study’s basic conclusion: If malpractice claims went away and insurance premiums went down, the cost of health care would not be significantly affected.
Maine has experienced a drop in malpractice claims over the past six years. Since the high water mark of 2003, medical malpractice claims in Maine, New Hampshire and Vermont — Medical Mutual Insurance Co.’s coverage area — have dropped 56% through 2009, Sheehan says. Because of this, premiums have remained relatively steady and come down in some cases, he says.
But while there’s been a drop in claims, there’s been no correlating drop in Maine’s health care costs, says Smith from the Maine Medical Association. “There are too many other variables pushing health care costs up, so premiums just would not be that significant,” he says.
Though the genesis of the study was to better inform political debate on the issue, Thomas doesn’t have much faith his study will make waves in Washington or Augusta. Last year, Thomas came across a letter the CBO sent to Sen. Orrin Hatch, R-Utah, outlining the office’s 2009 study that said tort reform represented 0.5% of national health care costs. A month later, Thomas saw Hatch on television disregard the CBO's study and, instead, cited the same tort reform cost savings President Bush used four years earlier.
“These guys don’t always tell the truth about these things,” Thomas says. “I think that over time research findings like this do have an impact and eventually these findings will be accepted. But political considerations drive a lot of things, so it doesn’t happen instantly.”
Most Recent
Most Recent
Comments