Orszag and me on medmal

Peter Orszag has a piece that makes sense on medical malpractice reform. Following up on my earlier post, medical malpractice is a classic example of Republicans mostly playing defense on on health policy. Republicans went mostly silent on this perennial favorite issue for them, in large part because it was an obvious way for a deal to come about. Think of it this way, after Scott Brown lost, 2 or 3 Republican Senators could have gotten tons on Medical Malpractice simply to vote for a motion to proceed to a conference committee bill. They preferred total opposition, which is their right of course. In hindsight, a big mistake.

I noted medical malpractice as one of the keys to a deal on the next steps beyond the ACA. From p. 72-73 of my book (Lots of this chapter was from an op-ed I wrote in the Raleigh News and Observer on August 6, 2009):

Medical malpractice reform is a perennial campaign issue for Conservatives, often sold as a panacea for fixing the cost problems of our health care system. This is a common view among physicians as well. Last year I spoke to an annual meeting of a medical specialist society, and there were innumerable physicians convinced that capping non economic damages in lawsuits would reduce health care spending by one fifth overnight (a recent op-ed on the subject making this claim was floating about). I kept asking the physicians asserting this if that meant their income would drop by one fifth overnight given that payments to physicians are the second largest category of medical expenditures in the nation? They looked at me like I had three heads in a way that said ”that is not what we had in mind!” I bet.

In reality, medical malpractice is a far better campaign issue than it is a policy that could revolutionize health care costs. However, Progressives should take this campaign issue away from Conservatives by enacting malpractice reform, both because there are big problems with this aspect of our system, as well to render the issue politically moot.

The reasons to reform medmal are not only political; the system does almost nothing well:

A malpractice lawsuit claims that a doctor treated a patient negligently, that this treatment caused harm, and it seeks monetary compensation. Negligence means that a physician failed to provide the standard of care expected by the prevailing medical custom. Juries decide cases that are tried, but most cases are settled or dropped. Lawyers get paid (typically 35 percent) only when they win or settle a case.

A successful malpractice system would protect patients from harm via a deterrent effect of lawsuits, compensate patients for harm and exact justice. In addition, a good system would protect physicians from frivolous suits, identify substandard physicians so that medical licensure boards could remediate them or remove their licenses and provide a clear signal to insurers regarding the risk of insuring a physician.

Our malpractice system does none of these well.

Some basic facts: About four in ten lawsuits are filed when there is no physician error. Such cases usually do not result in awards but are stressful to physicians. However, only two in 100 cases of truly negligent care result in malpractice claims being filed, leaving the vast majority of the worst care unaddressed. And when negligent care is identified via a suit, the compensation for harm is inefficient, with 55 cents being spent administering the system for each dollar paid to injured patients.

The result is physicians who feel under assault from the malpractice lottery, patients who remain at risk of substandard care, and injured persons who may not receive enough compensation.

Malpractice increases costs primarily through defensive medicine — the ordering of unnecessary tests, consultations and procedures designed to demonstrate care and caution to use as a defense if a physician issued. Defensive medicine is estimated to increase system costs by one percent to nine percent. At 5 percent, this would amount to $125 billion per year. I suspect that actual savings from even the most robust malpractice reform would be far less, primarily because there are multiple motivations for what is termed defensive medicine, including habit, monetary incentive and a culture that assumes more is better.

Even though addressing it is no cost-saving panacea, malpractice reform that is responsive to physician concerns is a crucial stepping stone to the type of comprehensive reforms that are needed to achieve a sustainable health care system. We must slow the rate of growth in health care costs, and it will take big changes throughout the system. We will not achieve this without the buy-in of doctors, whose professional judgment runs the health care system.

My experience with physicians who are colleagues and friends suggests that, though physicians differ in many ways, they have one similarity: an obsession with getting sued. I think this is borne of the cost (time and money) of their training and the fear that one lawsuit could take it all away. I have heard many physicians say that, although income is important to them, what they really would like is to practice medicine as a calling and not to constantly worry about getting sued and paying high malpractice premiums. We should take them up on this offer.

First, we should adopt a series of reforms discussed during the ACA debate and scored by the CBO as providing around $54 billion in deficit reduction over ten years that provides for a federal cap on noneconomic damages in lawsuits among other things (the AMA endorses a $250,000 cap). In return, all persons need to be insured with at least catastrophic coverage, reducing the pressure of having to sue to obtain money needed to finance care for a person rendered uninsurable due to an injury.

Second, we need to transition from addressing medical errors via an oppositional system toward one focused on patient safety and learning from mistakes. This openness is impossible in the current system. As part of this change, the medical profession would have to take more seriously the policing of its own.

Third, we should reconsider how liability insurance is provided. Many factors related to rising malpractice premiums have nothing to do with claims experience, including investment losses of insurance companies, insurance losses in other sectors and marketing behavior in which insurers cut premiums to gain market share only to raise them rapidly later to avoid insolvency. We need stable insurance that reduces physician worry, is consistent with a patient safety approach and compensates injury efficiently.

Finally, and perhaps most importantly, we need physicians to lead the way in systematically reconsidering how medicine is practiced in the United States. We cannot afford the current system, and we are not getting our money’s worth from what we spend. Currently, any large change in the system would be met by most physicians with the retort: What about lawsuits?

Sorry for all the book-based blogging, just lots popping up that I wrote about.

About Don Taylor
Professor of Public Policy (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute), and Chair of the Academic Council at Duke University https://academiccouncil.duke.edu/ . I am one of the founding faculty of the Margolis Center for Health Policy. My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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