A full accounting of medical malpractice reforms shows the benefits would be $242 billion a year.
Earlier this month, the Congressional Budget Office (CBO) said medical-liability reforms could save about $11 billion annually. This assessment is a gross underestimate of the potential benefits of reform and was intended to give cover to congressional Democrats who say malpractice-liability costs are trifling. But a full accounting shows the benefits would be a hefty $242 billion a year, more than 10 percent of America's health expenditures.
Last year alone, damage awards for medical-malpractice claims reached $5.9 billion. Adding in legal costs, underwriting costs, and administrative expenses, total med-mal tort costs were nearly three times higher — $16 billion. From 1986 through 2002, the average insurance payment for a malpractice claim more than tripled to $320,000. The average jury award for medical liability was $637,134 in 2006.
Getting sued is now part of the job description for physicians. Each year, up to 25 percent of them face lawsuits. Doctors are found innocent in 90 percent of cases, but they lose even then — average defense costs per claim approach $100,000. Fear of lawsuits causes most doctors to practice "defensive medicine," meaning they order unnecessary tests, referrals, and procedures to protect themselves against allegations of medical negligence.
A recent survey of doctors published in the Journal of the American Medical Association found that 93 percent of physicians admit to practicing defensive medicine. A 2008 survey by the Massachusetts Medical Society found that about 25 percent of medical procedures are defensive in nature.
Defensive medicine wastes patients' and doctors' time and costs $191 billion annually, according to the best scholarly research. Such waste drives up the cost of medical care and the price of health insurance. In fact, by making health insurance more expensive, defensive medicine adds at least 3.4 million Americans to the rolls of the uninsured, and reduced productivity and annual output by more than $41 billion in 2008. To ease the burdens of malpractice lawsuits, jury awards should be capped for impossible-to-quantify "pain and suffering," so-called non-economic damages.
According to my study "Tort Law Tally," capping awards in med-mal lawsuits cuts losses an average of 39 percent and annual insurance premiums by 13 percent. But the most important benefit from caps is better access to care. States with caps have 12 percent more physicians per capita than states without caps, according to a study published by the U.S. Department of Health and Human Services.
Non-economic-damage caps were an integral part of the malpractice reforms adopted in Missouri in 2005. Skyrocketing malpractice premiums had caused shortages of specialists, and patients had problems getting treatment. Thanks to the reforms, med-mal claims in Missouri are at a 30-year low. Average payouts are $50,000 lower than they were in 2005, before the caps went into effect.
Texas capped non-economic damages in 2003 as part of a broader tort-reform package, and since then, more than 16,500 doctors have flooded into Texas, many to previously underserved rural and minority communities. Texas has jumped six spots in the American Medical Association's ranking of doctors per capita. Nearly 430,000 Texans have health insurance today as a result of the medical liability reforms, says the Perryman Group.
Rising liability costs are causing hospitals to close; doctors to flee states; maternity centers, trauma centers, and clinics to shut down; and patients to travel long distances due to chronic shortages of providers in some communities. Congressional testimony relates the cases of Tony Dyess, who is brain-damaged, and Fred Andricks, who died, because lawyers drove neurologists out of their local areas, forcing long delays in treatment while being airlifted.
Despite these grim realities, Senate Majority Leader Harry Reid, a Nevada Democrat, claims: "The whole premise of a medical malpractice 'crisis' is unfounded." The senator is wrong, and so are those, including the CBO, who minimize the burdens.
Effective malpractice reforms would allow doctors to spend more time with patients, not attorneys, increase access to health insurance and local providers, and provide benefits of at least $242 billion a year. Less spending on wasteful litigation means better patient care and lower costs for all Americans.
Mr. McQuillan is director of business and economic studies at the Pacific Research Institute and coauthor of "The Facts about Medical Malpractice Liability Costs" and "Tort Law Tally."
NEWS REPORTS that have flooded the media since the national health-care debate began have, for the most part, accurately reported the positive impact of medical-liability reforms passed in Texas in 2003. What has not been reported is the relentless and ongoing trial-lawyer attack against tort reform in Texas and nationwide.
Before the reforms, 24 Texas counties had no emergency-room physician. Now all do. Another 58 counties have added at least one more emergency-room physician to expand access to care. Twelve counties had no licensed obstetrician. Now they all do. And another 26 counties have at least one more obstetrician than they had before the reforms. Twelve Texas counties have added at least one orthopedic surgeon, including seven counties that previously had none.
Reforms passed in Texas dramatically increased the total number of doctors in our state — especially high-risk specialists — by lowering medical-liability insurance costs by as much as 50 percent and by reducing the threat that doctors will spend more days in court than treating patients. The reforms do not deny a citizen’s right to his or her day in court, but they do help to mitigate the threat of meritless lawsuits that drive up the cost of medicine without any demonstrable improvement in quality.
When nervous doctors are forced to practice expensive defensive medicine, common sense tells you it will increase medical costs. Ask your own doctor, and get ready for a serious conversation.
The economic benefits to Texas of systemic lawsuit reform go far beyond health care. Common-sense reforms like putting an end to judge-shopping, reforming joint and several liability, capping punitive damages, reining in abusive class-action lawsuits and curbing asbestos and silica lawsuit abuse had results that have helped Texas expand its economy.
It is no coincidence that last year our state created more jobs than the other 49 states combined, says the U.S. Bureau of Labor Statistics. But the positive impact of lawsuit reform has not moved trial lawyers to retire quietly into the night, even in Texas. Instead, they are fighting harder than ever. Trial lawyers spend far more in campaign contributions in Texas than any other business or industry, says a study of Texas Ethics Commission campaign-expenditure reports compiled by Texans for Lawsuit Reform.
Nationally, some analysts estimate that their campaign contributions total more than $1 billion a year. To assure there will be more money where that came from, a new study by the U.S. Chamber of Commerce recently found, trial lawyers have increased spending on medical-liability advertising from $3.8 million in 2004 to $62 million in 2008, a 1,400 percent increase. Those ads are running in Texas as well as states where no reforms have been enacted.
In addition, personal-injury trial lawyers have leveled the most aggressive and sustained attack on lawsuit reform that we have seen in over a decade. They pushed more than 900 bills this year to try to get the Texas Legislature to roll back lawsuit reforms or create new opportunities to sue. Trial lawyers mask the size and source of their millions in political contributions by funneling them through innocuous-sounding front groups like the Texas Values in Action Coalition and Vote Texas.
Trial lawyers know that at least 70 percent of Americans believe the country suffers from too many lawsuits. They understand the public would not respond positively if they knew how much money trial lawyers put into campaigns. President Obama did not include aggressive lawsuit reform in his health-care plan priorities, and former Democratic National Committee Chairman Howard Dean, a physician, has made it clear why: “The reason why tort reform is not in the bill is because the people who wrote it did not want to take on the trial lawyers.”
Congress should not be intimidated. Lawsuit reform must be a key part of any effort to improve the quality and access of health care in America.
Richard Weekley, of Houston, co-founded Texans for Lawsuit Reform in 1994 and is currently volunteer chairman and chief executive.
The Obama administration wants to spend $25 million to figure out best practices in tort reform. A better idea would be to save the money and just adopt what Texas did six years ago to solve its medical malpractice lawsuit overabundance.
Tort reform is a term commonly used by the media, people at town hall meetings and now President Obama, but it is not clear whether everyone is referring to the same thing. Tort reform means eliminating frivolous lawsuits against physicians and hospitals.
The Texas Legislature in 2003 adopted sweeping changes to its civil justice system that significantly altered when, where and how many lawsuits could be filed. In the medical malpractice area, those reforms were basically threefold.
First, to sustain a lawsuit against the medical care provider, an expert report was required within 120 days of filing the suit stating that the doctor being sued committed a medical error that caused injuries.
Prior to 2003, such reports were left to the discretion of the judge handling the case. The Legislature made it mandatory and defined an expert to be someone actually practicing medicine in the same field as the doctor being sued, or a similar field.
The effect of this simple reform has been to discourage many frivolous lawsuits. Previously, a litigant could simply bring a lawsuit without any medical evidence to support the suit. Doctors were then forced to defend themselves in court at an average cost of more than $50,000 per suit. With one in five doctors being sued each year, the expense of frivolous suits was staggering.
Second, noneconomic damages were capped to control arbitrary awards on pain and suffering or loss of consortium. Though 30 states now have a cap on noneconomic damages, noneconomic damages now make up more than two-thirds of jury verdicts.
The Texas cap only applies to those damages that are not capable of an objective value, letting claimants still receive full compensation for out-of-pocket expenses, medical expenses, lost income and future expenses.
The combination of prohibiting doctors and health care providers from being exposed to unlimited and arbitrary awards, and requiring an actual medical report at the outset, have cut the number of medical malpractice lawsuits in Texas in half.
The third significant tort reform was to prohibit the introduction into evidence of phantom damages. The Texas rule of evidence, which previously allowed for the recovery of "reasonable and necessary" medical expenses, was being misused. The actual expenses were often much less than the billed charges, in the same way that no one pays the manufacturer's suggested retail price of an automobile.
Accordingly, the legislature changed the law to require that the damages are to be the actual expenses "paid or incurred" by the claimant. With the elimination of phantom damages, the law now requires the actual cost associated with any medical mistake be reimbursed.
These common-sense reforms have led to a massive increase in the accessibility of health care in Texas, huge growth in the capital infrastructure of hospitals and clinics, hundreds of millions of dollars more each year in charity care and Texas' adding more than 16,000 new doctors in just six years.
And in reducing the actual number of suits to those in which claims are meritorious — a recent Harvard study concluded that up to 85% of all lawsuits brought against medical providers were frivolous — we have created a more equitable system of justice.
So when people speak of tort reform, know that the effective reforms they should be talking about include expert reports, a cap on noneconomic damages and truth in expenses. These common-sense reforms are what have helped Texas bring fairness to its civil justice system.
President Obama, save our money. Follow Texas' lead.
• Nixon, an attorney, served six terms in the Texas House of Representatives, where he chaired the Committee on Civil Practices his last two terms. Considered the architect of Texas' medical malpractice reforms, he is now a senior fellow at the Texas Public Policy Foundation.
AUSTIN, Texas--(BUSINESS WIRE)--The Texas Pharmacy Business Council is endorsing Gov. Rick Perry for re-election. TPBC represents more than 1,700 independent community pharmacists and small business owners who employ more than 19,000 Texans.
“Gov. Perry has a clear record of assuring patient access to independent community pharmacies,” said TPBC Chair Bruce Rogers, RPh, of Victoria. “Beginning as a state representative from the rural West Texas town of Haskell and continuing while serving as our lieutenant governor and governor, he has demonstrated his understanding of the important role community pharmacists play in the delivery of quality health care, especially in rural Texas.
“Independent community pharmacy is the face of small business,” Rogers said. “Gov. Perry’s commitment to fostering a strong business climate in Texas is keeping us strong through the sluggish national economy. He also has consistently made quality appointments to the Texas State Board of Pharmacy.”
TPBC Executive Director Richard Beck, RPh notes that during the past legislative session, Gov. Perry supported and signed into law SB704, precedent-setting legislation mandating transparency in state contracts with pharmacy benefit managers. It allows state agencies to discuss with each other the details of their PBM contracts and merits of individual PBM proposals and quality of service.
“It is particularly important that this legislation also grants the state full auditing rights to ascertain whether the PBM is delivering on its promises,” Beck said.
The law also increases access to the pharmacy of their choice for active and retired state employees and teachers.
“We hope Congress will make the same demands in the health care reform currently being debated,” Beck said. “Transparency in PBM contracts is equally important in business and other non-government prescription drug benefit programs.”
TPBC is a collaboration between the independent pharmacy buying cooperative American Pharmacies and the Academy of Independent Pharmacists-Texas. It is dedicated to ensuring access to quality pharmacy services and preserving the independent pharmacy profession. www.TxRxCouncil.org
In these tough economic times for our nation, it is important to acknowledge that ideas still matter. It is not arbitrary that Texas has an unemployment rate nearly 2% below the national rate, or that California's unemployment rate is roughly 4% higher than it is in Texas. Our state didn't create more jobs in 2008 than the other 49 states combined by accident. It is no fluke that Texas is the #1 exporting state in the nation for several years running.
On Fox Business News, Governor Perry spoke at length with host David Asman about the relative economic and fiscal strength of Texas, even in these tough times. Governor Perry reiterated his five keys to success, including:
1. Don't spend all the money.
2. Keep the taxes low.
3. Make sure the regulatory climate is fair and predictable.
4. Tort reform to prevent frivolous lawsuits.
5. Fund an accountable education system to produce a skilled workforce.
Despite a malicious denial-of-service attack on RickPerry.org today, thousands of Texans were able to participate in "Talkin' Texas" and listen to Governor Rick Perry talk about his record and vision for Texas.
Governor Perry reflected on the conservative legislative accomplishments in Texas that have positioned our state for success. If you missed it earlier, you can now watch the live portion of the video for yourself:
Governor Perry today offered several new proposals to maintain Texas’ positive momentum, including:
• A constitutional amendment requiring a two-thirds vote of the legislature to increase state taxes;
• Making permanent the recent tax cut extended to 40,000 small businesses in the last legislative session (under current law, the $1 million business margins tax exemption will expire in 2011);
• Imposing criminal penalties on employers who knowingly violate employment laws by hiring workers who are in Texas illegally; and
•Paving the way for ongoing job growth by purging unnecessary laws and regulations that stifle Texas entrepreneurs.
The event, which garnered more than 22,000 views in spite of the attack, was streamed live from the HOLT-Caterpillar facility in San Antonio. Check back at http://RickPerry.org/talkin-texas and look out for regular updates.
WASHINGTON—Health care reform may be Priority No. 1 in Congress and at the White House, but for the 1,825 religious conservatives who gathered for the annual Values Voter Summit, the subject was barely on their radar screen.
“To me, there are so many more important issues than health care right now,” said John Leaman, a retired yacht builder from Lancaster, Pa. Added his wife Linda, a waitress: “I don’t think it’s as urgent as Obama’s making it out to be.” The real problem, she said, is illegal immigrants “cluttering up our emergency rooms.”
Jim Daly, president of Focus on the Family, speaks with Esther Fleece, director of Millennial Studies, at the 2009 Values Voter Summit in Washington. Health care reform was largely absent from the agenda and was not a factor in voters’ choices in a straw poll of possible 2012 GOP presidential candidates. (RNS PHOTO/Nick Kirkpatrick)
Indeed, among the dozen issues that summit participants cited in casting their votes in a straw poll for possible 2012 Republican presidential candidates, health care never made the list. The top three issues were abortion, protecting religious liberty and opposing same-sex marriage.
“It’s up to us to help each other; it’s not the government’s job to take care of us,” said Texan Karen Marsalis, a retired teacher from Deadwood, whose shirt, like her husband’s, featured stars and stripes and images of the Statue of Liberty.
Just days before the summit got underway, a report by the University of Akron and the liberal-leaning group Public Religion Research found that conservative and progressive activists don’t just disagree on hot-button issues on the public agenda, they can’t agree on the agenda itself.
Conservative activists—typified by the “values voters” who rallied in Washington— picked abortion (83 percent) and same-sex marriage (65 percent) as their top two issues; just 6 percent cited health care. Progressives, meanwhile, cited poverty (74 percent) and health care (67 percent).
The only organized attention that health care received at the two-day summit was a panel discussion on “ObamaCare: Rationing Your Life Away.”
Participants booed at any mention of “Obamacare,” and cheered Texas Gov. Rick Perry when he decried a government that “has its hands too far in our pockets and its nose too deep in our business.”
Many participants drew a distinction between access to health care and health care reform. Anyone who needs treatment, they said, can get the care they need. How they pay for it is their problem, no one else’s.
“Personal responsibility is not something people want to do anymore,” said Debbie Michael of Mount Airy, Md. “We expect the government to do it all.”
Still, some at the summit said there is room for improvement. Lorie Watson, a nurse from Simpsonville, S.C., works for an insurance company administrating third-party claims and worries about the high costs of drugs and tests. She said Washington could have “a limited role in reform, but not in providing health care.”