The Washington Post reports on a Dick Cheney speech in which he blames rising health care costs on medical malpractice suits:
Vice President Cheney, with a swipe at his Democratic trial-lawyer counterpart, yesterday blamed rising health care costs on "runaway litigation" and promoted a $250,000 cap on medical malpractice awards as the central tenet of the White House program to improve access, affordability and quality of care…"This problem doesn't start in the waiting room," Cheney said in remarks released by the campaign. "It doesn't start in the operating room. The problem starts in the courtroom."
With lawsuits on the rise and multimillion-dollar awards making headlines, physicians and many Republicans say limiting damages is the solution to the broader challenges confronting the U.S. health system.
The Congressional Budget Office does not think so. CBO approached the issue by looking at the experience of states that have enacted tort reform legislation. So far, the CBO has been unable to find any such savings:
CBO could find no statistically significant difference in per capita health care spending between states with and without malpractice tort limits.
Savings of that magnitude would not have a significant impact on total health care costs, however. Malpractice costs amounted to an estimated $24 billion in 2002, but that figure represents less than 2 percent of overall health care spending. Thus, even a reduction of 25 percent to 30 percent in malpractice costs would lower health care costs by only about 0.4 percent to 0.5 percent, and the likely effect on health insurance premiums would be comparably small. (Footnotes omitted).
John Kerry’s web site says that the cost of health insurance for families has increased to $9,549 per year or $795.75 per month. If everything goes right and all of the above assumptions prove true, the centerpiece of the Bush/Cheney healthcare plan would reduce premiums by $3.98 per month. Instead of paying $795.75 per month, a family would be paying $791.77 per month. I know you are thrilled.
Wait a minute, what about the savings from the elimination of defensive medicine? The CBO suggests that you not hold your breach waiting for such savings to materialize:
Proponents of limiting malpractice liability have argued that much greater savings in health care costs would be possible through reductions in the practice of defensive medicine. However, some so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients. On the basis of existing studies and its own research, CBO believes that savings from reducing defensive medicine would be very small.
Some observers argue that high malpractice premiums are causing physicians to restrict their practices or retire, leading to a crisis in the availability of certain health care services in a growing number of areas. GAO investigated the situations in five states with reported access problems and found mixed evidence. On the one hand, GAO confirmed instances of reduced access to emergency surgery and newborn delivery, albeit "in scattered, often rural, areas where providers identified other long-standing factors that affect the availability of services." On the other hand, it found that many reported reductions in supply by health care providers could not be substantiated or "did not widely affect access to health care."
With tort reform as the centerpiece of the plan, I think Krugman may be right.