Tort Reform and Health Care Costs

Medical malpractice court hearing document on desk with pen.

By Ajay K. Singh, MBBS, FRCP, MBA
August 31, 2017

The country gyrates and convolutes about whether Obamacare should be repealed and replaced, but the larger discussion should center on how to reduce health care costs.

One significant contributor to escalating health care costs is the impact of malpractice. An article published by Michelle Mello and colleagues in Health Affairs discusses the impact of medical malpractice on the US health care system. It estimates that in 2008, medical malpractice, including defensive medicine, cost $55.6 billion or about 2.4% of total health care spending.

Currently, having passed the House of Representatives, federal tort reform legislation is stuck in the US Senate . The nonpartisan Congressional Budget Office estimates that enacting federal tort reform would save approximately $14 billion over five years and $50 billion over 10 years. Some key features of the tort reform proposal languishing in Congress include a cap on non-economic damages, a three-year statute of limitations on medical liability suits from the date of injury, and a “fair-share” rule in which a defendant would be liable only for his or her share of responsibility for a medical injury.

One criticism of tort reform is whether it works, and in particular whether it could be implemented in the US. A recent article by Vishal Khetpal in Slate on reforming medical malpractice caught my eye.  The article makes two points:

  1. Tort reform that creates a no-fault compensation system has worked in several countries such as Sweden, Denmark and New Zealand.
  2. The US has implemented a system for patients harmed by the administration of a vaccine—the National Vaccine Injury Compensation Program. This system does seem to work.

The other criticism is that tort reform might reduce clinical quality and clinical outcomes. But the authors of an interesting article in the Journal of Public Economics disagree.

The President of the American Medical Association, Dr. David O. Barbe, MD, has been  quoted in Modern Healthcare by Mara Lee: “This legislation is an important step toward fixing that system—a step that reins in defensive medicine, reduces the growth of health care costs and strikes the correct balance by promoting speedier resolutions of disputes—while maintaining an injured patient’s access to just compensation.”

Ajay Singh, MBBS, FRCP headshotDr. Ajay K. Singh is the Senior Associate Dean for Global and Continuing Education and Director, Master in Medical Sciences in Clinical Investigation (MMSCI) Program at Harvard Medical School. He is also Director, Continuing Medical Education, Department of Medicine and Renal Division at Brigham and Women’s Hospital in Boston.

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