Tort Reform Revisited: Why It Isn't the Answer to All Our Healthcare Cost Woes

Yesterday I wrote about the curious case of McAllen, Texas and how putting caps on medical liability payouts wasn’t the magical cure for reducing the rising cost of healthcare. Nevertheless, doctors and Republicans seem to have a one track mind when it comes to this issue. For decades, these two groups have argued for tort reform, despite studies and real life case studies that show that capping jury awards in malpractice cases does nothing to lower health care costs.

Unfortunately, now President Obama wants to follow the same path. Deemed an “olive branch” to bring together Democrats and Republicans on this sensitive issue, the President recently directed the Health and Human Services Department to spend $25 million to help states and health care systems find alternative ways to resolve medical malpractice claims. Nevertheless, he has declined to put a national cap on malpractice awards, much to the chagrin of some doctors and Republican lawmakers.

Tort reform advocates like to argue that putting caps on malpractice awards will help decrease medical costs for doctors, which also means reduced costs for patients. Indeed, recent studies by the nonpartisan Congressional Budget Office showed that putting caps on medical malpractice awards would reduce doctors’ insurance liability payouts, which, in turn, would reduce medical fees for patients. However, the reduction in costs is extremely modest—in fact; national healthcare spending would go down by a meager .2 percent. Medical errors cost 44,000 people their lives each year: that’s more than the number that are killed by highway accidents, breast cancer, or AIDS annually. In light of those daunting statistics, it hardly seems worth the .2 percent savings in national healthcare spending to take away patients’ legal remedies for medical injuries that were caused by no fault of their own.

Michigan has some of the nation’s toughest caps on medical malpractice payouts: $410,800 for non-economic damages such as pain and suffering. So patients aren’t getting a windfall payout when they do sue, despite what some tort reformers would like you to believe. Instead of always blaming the lawyer or the “sue-happy patient”, maybe it’s time to point our fingers at the malpractice insurance industry that charges astronomical amounts simply because they can. More importantly, let’s focus on improving patient safety to being with.