CBO: Tort Reform Would Cut Health Spending by 0.5%

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Friday, October 09, 2009 at 3:18 pm

Enacting a comprehensive set of medical malpractice reforms would reduce nationwide health care spending by 0.5* percent, according to a report released today by the Congressional Budget Office. Over 10 years, the changes would reduce federal deficits by $54 billion.

Roughly 0.2 percent of the savings would come as a result of the reduction in providers’ malpractice insurance premiums, while an additional 0.3 percent would come from “slightly less utilization of health care services,” CBO noted.

CBO’s estimate takes into account the fact that because many states have already implemented some of the changes in the package, a significant fraction of the potential cost savings has already been realized.

The estimates are based on a package of reforms “similar” to the following:

– A cap of $250,000 on awards for noneconomic damages;

– A cap on awards for punitive damages of $500,000 or two times the award for economic damages, whichever is greater;

– Modification of the “collateral source” rule to allow evidence of income from such sources as health and life insurance, workers’ compensation, and automobile insurance to be introduced at trials or to require that such income be subtracted from awards decided by juries;

– A statute of limitations—one year for adults and three years for children—from the date of discovery of an injury; and

– Replacement of joint-and-several liability with a fair-share rule, under which a defendant in a lawsuit would be liable only for the percentage of the final award that was equal to his or her share of responsibility for the injury.

Those reforms would reduce federal spending by $41 billion over 10 years, CBO estimated, while increasing revenues an additional $13 billion. The numbers drew immediate praise from Republicans, who have pushed for years to rein in malpractice lawsuits. Sen. Orrin Hatch (R-Utah), who requested the CBO study, issued a statement arguing that the findings “show that this problem deserves more than lip service from policy-makers.”

Unfortunately, up to now, that has been all the President and his Democratic allies in Congress have been willing to provide on these issues.

Sen. Charles Grassley (R-Iowa), the ranking member of the Senate Finance Committee, also weighed in, saying that “it makes no sense that congressional Democrats have taken malpractice reform off the table.”

CBO says comprehensive medical liability reform would reduce federal budget deficits by roughly $54 billion over the next 10 years. That’s not chump change.  It’s a no-brainer to include tort reform in any health care reform legislation.

*An earlier version of this post indicated that the savings would represent 0.2 percent of the nation’s health spending. In fact, the 0.2 percent figure represents only the savings derived from decreased malpractice insurance premiums. An additional 0.3 percent in savings would result from a “slightly less utilization of health care services,” CBO said.

Comments

20 Comments

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Pingback posted October 9, 2009 @ 4:09 pm

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Tort reform would cut healthcare costs by 2/10ths of 1% « Later On
Pingback posted October 9, 2009 @ 4:23 pm

[...] Budget Office, a non-partisan research service, has looked at the issue of tort reform. Mike Lillis in the Washington Independent: Enacting a comprehensive set of medical malpractice reforms would reduce nationwide health care [...]


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Pingback posted October 9, 2009 @ 4:57 pm

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Pingback posted October 9, 2009 @ 11:34 pm

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gandhi77
Comment posted October 10, 2009 @ 6:59 pm

So instead of us spending $7200, compared to France's $3040 per person we would be spending $7150!
Hurray!


MKirschMD
Comment posted October 10, 2009 @ 9:00 pm

I think that the .5% estimate of medical malpractice costs is too low. How can you accurately determine when a test is done for defensive purposes as opposed to for medical reasons? The benefits to tort reform transcend financial savings. They bring fairness to a system that has abused the medical profession. What do doctors think? See http://www.MDWhistleblower.blogspot.com under Legal Quality category.


christopherrussomd
Comment posted October 10, 2009 @ 10:48 pm

Any bill that is produced that does not include real tort reforms can not be taken seriously. At this very moment, on the cover of the Tampa Bay Yellow Pages, there are three different advertisements for three different malpractice firms. JUST ON THE COVER! On my way to work, I see SIX roadside billboards, advertising the services of malpractice attorneys. This along a four mile stretch of northbound 275. If you don't think physicians think about these things, you are wrong. I know I do. I know my colleagues do. You can bet I am going to order all of the tests in the book to CMA. I am not about to give away what took me over a decade and a half to earn. Not a chance. The arguments against real tort reforms are old, tired, and stopped holding water a long time ago.

Christopher Russo, M.D.
University of Michigan Medical School '94


“Congressional Budget Updates Estimates on Savings From Malpractice Reform” and related posts « Composition4u.info Blogs
Pingback posted October 11, 2009 @ 3:43 am

[...] CBO: Tort Reform Would Cut Health Spending by 0.2% - The Washington Independent [...]


Pug
Comment posted October 11, 2009 @ 1:42 pm

I don't have a problem with tort reform, although its benefits are vastly exagerrated by its proponents. Is there any evidence that it has worked in places where it has been enacted, like Texas and Missouri? Are there any statistics that show it has worked?

Also, if tort reform does occur it would be nice if the medical profession would police itself a little.


christopherrussomd
Comment posted October 11, 2009 @ 2:09 pm

Pug,

I will not pretend I have all of the answers. I will leave that to folks who are smarter than I am. I do know that the just threat of getting sued plays a huge role in how physicians conduct themselves on a day to day basis. With today's medicolegal climate, when I go to work and see a fairly routine patient with a fairly routine complaint, I am much more inclined to order a $10,000 work-up to get a 99% diagnosis, than to spend $200 to get a 97% diagnosis. Knowing that there are dozens of malpractice attorneys around the corner salivating to get their hands on me. Knowing full well, that although I may be innocent of any wrong doing, I may be tied up in court for years and that a judgement may be settled out of court because it is cheaper than actually defending myself. This is 'lawsuit lotto', and the attorneys know this. They will tell you that they are protecting patient's rights, yet take 60% or more of any award. Make no mistake, I agree with compensating a person who is a victim of gross negligence, however, the trial lawyers have the current system rigged and flood Congress with money to keep it that way.


Taking Away Patients’ Rights To Further Enrich Insurance Companies
Pingback posted November 12, 2009 @ 7:35 am

[...] Because you’d really want to take away the rights of victims in a democracy to lower the health care costs by…wait for it…wait for it… “.5%” (according to the CBO). [...]


Protecting Patients’ Rights « Yuvablog
Pingback posted November 13, 2009 @ 2:47 pm

[...] Because you’d really want to take away the rights of victims in a democracy to lower the health care costs by…wait for it…wait for it… “.5%” (according to the CBO). [...]


21.2% Medicare Pay Cut for Doctors Will Take Effect Monday - Page 2 - ValueMD Medical Schools Forum
Pingback posted March 1, 2010 @ 9:12 am

[...] would come from “slightly less utilization of health care services,” CBO noted. CBO: Tort Reform Would Cut Health Spending by 0.5% The Washington Independent __________________ UCLA, Engineering (2006) AUC, Medicine (2013) "…reality has a [...]


Tort reform — Successful Demonstration Projects? | MalpracticeAttorneys.net
Pingback posted May 22, 2010 @ 9:48 pm

[...] The CBO estimates that tort reform leads to a drop in insurance premiums between 0.5% and 2% http://washingtonindependent.com/63471/cbo-tort-reform-would-cut-health-spending-by-0-2 [...]


Basleanew
Comment posted September 26, 2010 @ 12:47 am

Sorry, but the reason lawyers advertise for medical malpractice is because, well, we have so much of it. Over 250,000 deaths occur in the US every year, according to Journal of the American Medical Association.

Your MD buddies should be thinking about it, next time they decide to “fast-food” a patient in a 60 second checkup so that they can make their tee-off time.

We have tort reform in CA. Same 250K/500K limit that the GOP says would bring costs down. They don't. Our insurance rates are still among the highest in the nation. Those “tort” savings go directly to the doctors and the malpractice insurance companies…and does NOT trickle down to the patients.

So Tort = BS. Basically a soundbite for those who don't want to seriously reform our health care system.


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