Saturday, August 29, 2009

The cat is finally out of the bag on Tort Reform

Caving to Trial Lawyers
It's necessary to tie any health-care reform to tort reform.
by Fred Barnes
09/07/2009, Volume 014, Issue 47

We've always suspected that fear of angering trial lawyers was the only reason President Obama refused to embrace tort reform as a crucial part of achieving his goal of reduced health care costs. Now we know for sure. A moment of candor by Howard Dean, the former chairman of the DNC and an enthusiastic backer of Obama's health reform initiative, confirmed our suspicions. "The reason that tort reform is not in the bill is because the people who wrote it did not want to take on the trial lawyers in addition to everyone else they were taking on," Dean said at a town hall meeting in Virginia last week.

So much for Obama's insistence that cutting costs is dear to his heart. He's rejected, for purely political reasons, one of the most effective tools for containing medical costs. It would upset a special interest group--well-heeled plaintiff's lawyers--that is one of the biggest funders of the Democratic party.

Yet tort reform remains a key to paring costs. The president can make a stab at directly cutting back spending on health care, but that's bound to add to the political unpopularity of Obamacare and is unlikely to pass even an overwhelmingly Democratic Congress. In particular, shrinking Medicare spending is a nonstarter, given the furious opposition of seniors.

Tort reform, in contrast, has the advantage of being popular. It would put sensible limits on medical malpractice lawsuits that have flooded the courts and forced doctors to practice "defensive" medicine. Studies of the effects of such medicine put its price tag at a minimum of $100 billion a year and probably more than $200 billion.

In a study last year by the Massachusetts Medical Society, 83 percent of doctors reported they practiced defensive medicine. This is hardly a surprise. Simply to avoid being sued, doctors order more tests, procedures, consultations, referrals to specialists, and hospitalizations than they otherwise would. And why not? Their reaction to lawsuit abuse is perfectly rational.

There are other downsides. Because doctors pay more for malpractice insurance, patients pay more too: nearly $2,000 a year in extra health expenses for an average family, according to the rate of defensive medicine found in a study by Daniel Kessler and Mark McClellan. Stuart Weinstein, the former president of the American Academy of Orthopaedic Surgeons, has calculated the extra cost of delivering a baby due to high insurance premiums. If a doctor delivers 100 babies a year and pays $200,000 for insurance (the rate in Florida), "$2,000 of the delivery cost for each baby goes to pay the cost of the medical liability premium," he wrote.

Another problem stemming from the surge in malpractice lawsuits is that the doctors most affected--those in obstetrics, neurosurgery, and emergency medicine--leave states with high insurance costs and courts inclined to hand out multimillion-dollar malpractice awards. They migrate to states with limits on lawsuits and lower premiums on malpractice insurance.

Tort reform works. Texas is a good example. In 2003, the state enacted caps on noneconomic damages (so-called pain and suffering) and added a requirement that lawsuits be approved by a panel of medical experts. Over the next four years, premiums fell 21 percent, the drift of doctors out of the state was halted, and 7,000 new doctors set up practices.

It would be nice if every state followed the Texas model. That hasn't happened. But lawsuit abuse and rising health care costs are a national problem. So tort reform is an appropriate part of national health care reform. And a necessary part if there's any hope for curbing costs.

In his speeches, Obama notes that "health care inflation is go[ing] up about twice as fast as regular inflation." That's not quite true. But in any case, medical malpractice premiums are growing at four times the rate of inflation, a whopping 12 percent annually. So why not address them? Republican senator Mike Enzi of Wyoming has proposed health courts to rule on malpractice lawsuits. You can guess the fate of this idea. Obama's Democratic allies in the Senate blocked it, without any protest by the president or his minions.

Howard Dean has exposed the hypocrisy and political favoritism in Obama's health reform scheme. Republicans could be much more vocal in making this part of their critique of Obamacare. In doing so, they would also be pointing out that they have proposed solutions for this key contributor to health care costs--and Obama has not.

--Fred Barnes

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