Where did medical malpractice go?

One of the most interesting aspects of the debate over health reform from June 09-now is the fact that medical malpractice was not as large a part of the debate as I assumed it would be. Why did this come about? Three main reasons, I think.

First, organized medicine in the form of the American Medical Association was in the (historically unusual) position of supporting the reform efforts. Even when they didn't get changes they wanted in the area of medical malpractice, and didn't get the SGR update (aka 'the doc fix) included in reform. So, one of the groups that would have historically been using med mal to drive opposition to reform was in support. This made a big difference.

Second, the CBO came out with a report in October, 2009 that did two things. The first was that it concluded that the current malpractice system does increase the overall cost of the health care system. The second thing it did was estimate the level of effect at a much lower level than many pundits and advocates for malpractice reform argued. CBO estimated that adopting a national set of reforms similar to those adopted in the state of Texas (having, notably a cap on non-economic damages) would reduce the deficit by $54 Billion over 10 years (with $13 Billion of this being indirect savings due to slower premium increases and less revenue loss due to the fact that employer paid premiums are tax free income to employers). $54 Billion over 10 years is real money, but the projected total health care spending over the same 10 years is around $35.5 Trillion, or 35.5 thousand Billion dollars. So, changes in medical malpractice laws is no cost panacea. There were some pundits writing about malpractice, saying annual costs of defensive medicine were $200 Billion per year, and others who took a study that asked doctors why they ordered tests and concluded that 25% of doctor visits were due to defensive medicine. This of course means that if one 'fixed' the malpractice system and reduced defensive medicine, that doctor visits in the U.S. would fall by 1 in 4! If I thought that were true, I promise I would sign up....no matter what my friends who are lawyers would say.

In short, defensive medicine is real and has a cost, but it is relatively small as a way to reduce expenditures, and a close look at the issue shows there is a related patient safety/quality issue.

Third, President Obama was ready to call the bluff of Republicans in the area of medical malpractice and cut a deal. It is true that the law that passed has only smallish demonstration projects in the area of medical malpractice. However, close your eyes and imagine what would have happened if one or two Republicans would have been willing to vote for the motion to proceed (and end the filibuster) of the health reform bill in the Senate last winter. Yep, they could have gotten quite a lot of malpractice reform. As I was writing about health reform all last year in the News and Observer, I always thought the political deal went through malpractice reform. And the President in his September 2009 speech noted willingness to talk. One of the key reasons that politicians at least turned down the malpractice talk (at least as compared to normal discourse) was that they didn't want a deal. In raw political terms, they choose poorly. If they would have defeated the reform bill, they would have chosen wisely, again in raw political terms. Given the bill became law, the Republican advocates of malpractice reform missed an opportunity to push forward a long term interest of theirs.

The reality is that there are many problems with the medical malpractice system in the United States, as I wrote last year. The current system really does almost nothing well. Doesn't protect patients, doesn't protect doctors from unwarranted suits, doesn't give a good risk signal to malpractice insurance companies, doesn't efficiently compensate patients who have actually been harmed by negligence and so on. In short, whatever aspect of the system you dislike most (defensive medicine, quality concerns and patient errors) there is plenty of evidence that the 'opposite' problem is a big problem. We need reform of the malpractice and patient safety systems in the U.S., it just won't save us that much money, but we need to find all the ways to reduce spending we can. Maybe malpractice reform will be the key aspect of a deal between Democrats and Republicans to take another step ahead in the next Congress.