Wampum

The estimable Walter Olson, at Point of Law links to this Houston Business Journal article touting the health care cost savings allegedly resulting from passage of tort reform in Texas.

Two years after sweeping medical liability reform in Texas, Houston-area physicians are finally experiencing some positive effects. All five of the state's largest physician insurers have announced rate cuts in 2005, according to The Texas Alliance for Patient Access.

Passage of Proposition 12, also known as tort reform, on Sept. 1, 2003, caused some insurers to consider adjustments to malpractice rates. The state referendum, which placed a cap on jury awards related to malpractice suits, has resulted in attracting more insurance carriers to the state as well as more doctors.

"Last year, we were 'wait and see,' but now we're definitely pleased," notes family practitioner Dr. Robert Vanzant, president of the Harris County Medical Society.

"What's happening is going to help stabilize health care costs in Texas," he adds.

I have my doubts about whether the passage of the tort reform legislation caused malpractice insurance rates to fall. Putting such doubts aside for the moment, and assuming that the legislation did, in fact, lower premiums, how large an effect will that have on health care costs?

The rate cuts by the state's five largest physician insurers -- many double-digit reductions -- will collectively result in $48.6 million in annualized premium savings for Texas physicians, Marcus says.

Let’s assume for the purpose of argument that tort reform in Texas has resulted in a $50 million per year reduction in physicians malpractice insurance premiums. Let’s further assume that doctors will pass all of those along to patients. How much can Texans expect their health insurance premiums to be reduced?

There are about 21 million Texans. If the savings are spread evenly across the population, the average citizen will see his or her monthly health care premium reduced by 20 cents per month.

With that kind of money, if 36 Texans pooled their savings for a year, together they would have almost enough money for a year’s subscription to the Houston Business Journal where they could read about how much better off they are.