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THE MODEST GAINS OF LAWSUIT CAPS
Posted on Sep 17, 2009
IN MY OPINION
THE MODEST GAINS OF LAWSUIT CAPS
Malpractice reform hasn’t bent the cost curve in Texas healthcare. But it’s still paying off.
Look at Texas, and you’ll know why President Barack Obama says that malpractice reform isn’t a silver bullet for fixing healthcare.
Look at the same results, and you’ll know why Republicans want it to be part of the healthcare makeover.
Six years ago, voters approved a proposition to end a “malpractice crisis” that was driving up liability premiums and pushing some doctors to give up their practice.
The key provision put a $250,000 cap on noneconomic damages, such as pain and suffering. People still debate whether the law helps or hurts patients, but there’s no dispute that the law achieved its main goals.
Roughly half as many malpractice suits are being filed in Texas these days. Liability premiums, which had doubled before reform, have declined more than 30 percent.
And most important, Texas has become a beacon to new doctors. Last year, 3,621 newly licensed physicians came to Texas, 78 percent more than in 2002, the year before tort reform was adopted.
To supporters, this is what success looks like, without any caveats.
But on other measures, including key targets in national healthcare reform, lawsuit caps haven’t been a game-changer.
Healthcare spending has grown faster in Texas than the rest of the country. Patients are paying more for health insurance and medical bills. Doctors do more tests and scans, an indication that so-called defensive medicine hasn’t declined here.
There also hasn’t been more coverage for the uninsured, a top priority in the Obama push. In Texas, 1 in 4 residents has no health coverage, the highest percentage in the nation and well above the national norm.
It’s not surprising that malpractice reform has failed to move the needle on healthcare costs. Caps are in place in 31 states, including Texas, and many academic studies have found that they have limited impact on health economics. “Medical malpractice is not a major driver of spending trends,” concludes a report by the Robert Wood Johnson Foundation.
Liability premiums and defensive medicine, the report says, “are not a large factor, nor are they a significant factor in the overall growth of healthcare spending.”
The Congressional Budget Office reached the same conclusion in 2004, writing that “even large savings in premiums can have only a small direct impact on healthcare spending.”
The reason is straightforward: Medical malpractice, for all the passion it generates, is a tiny part of the gargantuan healthcare business.
Malpractice lawsuits, lumped together with medical errors, account for maybe 1.5 percent of the $2 trillion spent on healthcare annually, experts say.
Even a major reduction in costs — say the 31 percent cut in liability premiums for doctors in North Texas — isn’t enough to show up in the broader numbers.
The savings are still meaningful to the players involved. In the first five years after tort reform, health providers in Texas saved almost $600 million from lower liability premiums, says Jon Opelt, executive director of Texas Alliance for Patient Access, an advocacy group for doctors, hospitals and others.
There are also savings from lower legal expenses and, of course, smaller jury awards. What happens with the savings is not clear.
Anecdotally, doctors say they’ve expanded practices, given pay raises to nurses and used the money to make up for cuts in Medicare and Medicaid rates. Texas hospitals say they’ve used the savings to enhance emergency rooms, add obstetrics programs and invest in clinics for the uninsured.
Nursing homes, which lost some of the largest malpractice cases, are able to get liability coverage now, Opelt says. That can be the difference between closing and staying open.
How much money ends up as higher profits for hospitals and doctors? And how much of the benefit from tort reform accrues to liability insurance carriers?
Alex Winslow of Texas Watch, a consumer advocacy group, says that insurance companies have gained the most from reform. Patients have suffered, he says, because lawsuit caps make it harder to file a case and pay medical experts to testify.
He also says that high awards put pressure on doctors and hospitals to get it right — and to weed out physicians who aren’t cautious enough.
The Congressional Budget Office looked at claims that tort reform would reduce defensive medicine, increase access to care and even lead to more medical injuries.
“Evidence for those other effects is weak or inconclusive,” the report says.
Republicans have long pushed for tort reform on a national scale. They stood and clapped when Obama raised the subject in his prime-time speech last week.
“I don’t believe malpractice reform is a silver bullet,” the president said, “but I have talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs.”
He said he would approve state projects aimed at improving patient safety and letting doctors focus on medicine. Those might include specialized health courts and “early-offer” programs to quickly mediate a settlement.
Obama did not mention lawsuit caps, a cornerstone of malpractice reform, and has previously said he would not support them. One commentator said that Obama was making a political gesture rather than a substantive proposal.
“He threw this sop to the Republicans, this myth that somehow medical malpractice is driving up health insurance,” Paul Begala, a Democratic strategist, said on CNN after the speech. “He said, ‘We’ll have test cases.’ ”
Well, Begala said, his home state of Texas has been a test case, “and healthcare costs are increasing faster than the national average.”
True enough, but that’s not the only measure of success.
If malpractice reform makes healthcare work better, it’s worth doing, even if it doesn’t bend the cost curve.
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