Obamacare's Fatal Flaw - Lack of Legal Reform

This blog’s thesis is straightforward - The fatal flaw of health reform is lack of legal reform. And the lack of legal reform can be traced to Trial Lawyers’ pressure on Congress to exempt tort reform from House and Senate bills.

No doubt Trial lawyers will argue: Why bother with tort reform? Malpractice settlements amount to one 1% to 2% of total health costs. But this argument overlooks the enormous indirect costs of documenting every step in patient-doctor exchanges, of time and money spent in informed consent warnings, and the toll on the system exacted by the practice of defensive medicine.

In this blog, I shall make my case by quoting three experts on tort reform.

• First, Lou Goodman, PhD, chief executive office of the Texas Medical Association and president of the Physicians’ Foundation, which represents 650,000 practicing physicians in state and local medical associations. Here are his comments in my book Obama, Doctors, and Health Reform (IUniverse, 2009). These comments come in an interview with him.

Q: What do you regard as your greatest accomplishments at the Texas Medical Association?

A: Our 2003 tort reform effort would fall into the category of a major accomplishment for the state of Texas, and it’s now used as a national model. That reform put a cap of $250,000 for noneconomic damages for physicians, a $250,000 cap for hospitals, and another $250,000 cap for a second hospital or nursing home. This is referred to as a stacked cap, $250,000 for each party. The total is $750,000, but only $250,000 of that falls on the doctor’s side.

This model appeals to legislators because it’s fair and differentiates between physicians and other providers in the system. The model also can help attract physicians to a state. Before we passed our tort reform, Texas was losing all of its liability carriers. But now we have 15 or more in the state, all competing for the business.

Most important, access to care was shrinking in rural and other underserved areas. But during this past year, the number of physician licenses increased from 2,000 to 4,000, and physicians are now settling and practicing in underserved parts of Texas, such at the Rio Grande Valley. Both primary care and specialist physicians are coming to Texas. The specialists aren’t restricting access to high-risk procedures for fear of liability penalties. Patients are getting better care and highly specialized procedures are being done. All of this is attributable to the tort reform legislation.

Q: Is it true that medical malpractice insurance premiums also have dropped in Texas?

A: Yes. Premiums have dropped by 50% or more, and the largest carrier, Texas Medical Liability Trust, is actually providing a dividend to physicians. Also, carriers have been able to rebalance their reserves. So we can stabilize the market and bring more doctors in to provide coverage.

• Next, Philip Howard, J.D. Chairman of Common Good, a Nonprofit Legal Reform Coalition, in the July 31, Washington Post, "Health Reform’s Taboo Topic."

Health-care reform is bogged down because none of the bills before Congress deals with the staggering waste of the current system, estimated to be $700 billion to $1 trillion annually. The waste flows from a culture of health care in which every incentive is to do more -- that's how doctors make money and that's how they protect themselves from lawsuits.

Yet the congressional leadership has slammed the door on solutions to the one driver of waste that is relatively easy to fix: the erratic, expensive and time-consuming jury-by-jury malpractice system. Pilot projects could test whether this system should be replaced with expert health courts, but leaders who say they want to cut costs will not even consider them.

What are they scared of? The answer is inescapable -- such expert courts might succeed and undercut the special interest of an influential lobby, the trial lawyers. An expeditious and reliable new system would compensate patients more quickly and at a fraction of the overhead of the current medical justice system, which spends nearly 60 cents of every dollar on lawyers' fees and administrative costs.•

- Finally, Charles Krauthammer, MD, a psychiatrist turned political commentator and columnist, in the August 7 Washington Post, 'A Better Health Plan."

As I wrote recently, our crazy system of casino malpractice suits results in massive and random settlements that raise everyone's insurance premiums and creates an epidemic of defensive medicine that does no medical good, yet costs a fortune.
An authoritative Massachusetts Medical Society study found that five out of six doctors admitted they order tests, procedures and referrals -- amounting to about 25 percent of the total -- solely as protection from lawsuits. Defensive medicine, estimates the libertarian/conservative Pacific Research Institute, wastes more than $200 billion a year. Just half that sum could provide a $5,000 health insurance grant -- $20,000 for a family of four -- to the uninsured poor (U.S. citizens ineligible for other government health assistance).

What to do? Abolish the entire medical-malpractice system. Create a new social pool from which people injured in medical errors or accidents can draw. The adjudication would be done by medical experts, not lay juries giving away lottery prizes at the behest of the liquid-tongued John Edwardses who pocket a third of the proceeds.

The pool would be funded by a relatively small tax on all health-insurance premiums. Socialize the risk; cut out the trial lawyers. Would that immunize doctors from carelessness or negligence?

No. The penalty would be losing your medical license. There is no more serious deterrent than forfeiting a decade of intensive medical training and the livelihood that comes with it.

I rest my case.