POLITICO - Tort reform is a bipartisan must
By: Rep. Darrell Issa
February 25, 2010 05:17 AM EST
Now that his yearlong partisan push for government-run health care has so far failed to produce legislative results, President Barack Obama wants Republicans to join him for another White House summit to see if he can salvage his proposals. But unless the president and congressional Democrats address the need for tort reform as a critical component of cutting health care costs, a bipartisan solution seems unlikely.
AAJ: Opponents of health care reform, without any substantive ideas of their own, have seized on tort reform – or taking away the rights of injured patients – as their so-called solution to America’s broken health care system. Despite all the facts proving that this is no solution at all, reform opponents incessantly beat the tort reform drum and ignore the need to better patient safety and ensure the health and well-being of all Americans.
The unsustainable path of rising costs is a serious national problem. Currently, health care spending exceeds $2.5 trillion per year. By 2019, it is expected to top $4.7 trillion per year. Any hope for cost containment would involve comprehensive medical malpractice reform to end the practice of defensive medicine, close the loopholes that allow frivolous lawsuits to clog up the system, and set reasonable limits on jury awards.
AAJ: According to the Congressional Budget Office, passing the most anti-patient tort law changes would save only one-half of one percent of all health care costs. The CBO also found some evidence that these tort law changes could increase patient mortality rate, which Rep. Issa fails to mention in either op-ed.
The president seems to think that eliminating wasteful spending alone would get Americans on track to more affordable coverage. But the government’s track record of recouping its losses from waste, fraud and abuse leaves something to be desired. In 2008, for example, the government recovered a meager $35 million from criminal prosecution of fraud once enforcement costs were factored in. Real savings would start when Congress tackles the billion-dollar problem of defensive medicine.
Defensive medicine — when doctors order unnecessary and usually expensive tests and procedures in order to avoid lawsuits — is a major contributor to skyrocketing health care costs. As much as $210 billion is spent on defensive medicine annually — equal to $700 for every U.S. man, woman and child.
AAJ: Again, the most reliable source of this information is the CBO, which calculated the “direct” costs of the malpractice system (such as malpractice insurance) and “indirect” costs (such as so-called “defensive medicine”). They found the most anti-patient tort law changes would reduce health care costs by one-half of one percent, or $54 billion over 10 years, not even remotely close to the $210 billion annually that Rep. Issa and other tort reformers claim is possible. The PWC figure actually comes from data that has already been questioned and debunked previously by the CBO and Government Accountability Office. And if 39 states have caps (which Rep. Issa mentions in his Roll Call op-ed), why is this so-called defensive medicine so rampant if hospitals and physicians have no fear of liability?
This helps drive up insurance premiums that are already too high for many Americans. And the excessive malpractice litigation inevitably leads to physician shortages — especially among obstetricians, neurosurgeons and emergency room physicians.
AAJ: States with caps, most notably California and Texas, have the most expensive health care and highest rates of uninsured in the country. Obviously, tort reform has done nothing to fix these problems. Additionally, according to statistics from the American Medical Association, the number of physicians nationwide is at its highest point ever. States without caps also have a higher rate of physicians per 100,000 population that states with caps.
Fewer doctors mean reduced access to medical care for everybody. New Jersey, for example, will be short 2,800 family doctors and specialists by the year 2020, according to a recent report from the New Jersey Council of Teaching Hospitals. The reason for the shortage, council President Richard Goldstein says, is a “morale problem” because of the state’s “hostile” environment for doctors and the heightened threat of malpractice lawsuits.
AAJ: New Jersey has seen the number of doctors in its state increase year-after-year, faster than population growth. The number of doctors has increased 14 percent in the last decade (1999 – 2008). In 2008, New Jersey malpractice insurers took in more than twice what they paid out, showing they are gouging physicians on their premiums.
As long as out-of-control malpractice premiums are built into medical costs, many will never be able to afford coverage. Shamefully, it is estimated that the cost of defensive medicine and the associated liability-based medical care costs account for at least 3.4 million uninsured Americans.
AAJ: So is Rep. Issa stating that the most anti-patient tort law changes would magically insure 3.4 million Americans?
Moreover, the current system is studded with irresponsible lawyers’ fees associated with malpractice claims that do not involve injury or medical error. A large share of the awards goes to pad the pockets of plaintiffs’ attorneys.
AAJ: This is filled with too many contradictions to count. First, the idea that there’s a litany of frivolous malpractice suits is absolutely erroneous. According to a study from Harvard’s School of Public Health, 97 percent of cases are meritorious, stating that depictions of a system filled with frivolous cases is “overblown.” Additionally, if a trial attorney tries to take a case that does not involve an injury or medical error, what jury is going to rule in their favor? And trial attorneys only recover any money if they win, so it’s against their own economic interest to spend time and money on a case that has no chance of winning.
Recently, the Manhattan Institute concluded that approximately 10 cents of every dollar paid for health care services goes to cover malpractice premiums, defensive medicine and other costs associated with excessive litigation.
AAJ: The right-wing Manhattan Institute, funded by insurance and drug companies (who constantly demand tort reform), is hardly a neutral source of information. The CBO’s analysis, for obvious reasons, holds more water.
Tort reform that reduces frivolous lawsuits and caps outrageous jury awards is a critical component of any solution to bring the cost of health care within reach of every American. So far, however, the president has barely mentioned it.
AAJ: Again, there are hardly any frivolous lawsuits (see Harvard study above). And when 39 states have caps, and it clearly hasn’t lowered costs, why are injured patients continuously targeted?
If bipartisan support is what he’s after, the president needs to do more than host Republicans at the White House for a chat. He’s going to have to get serious about the damage being done to U.S. health care by frivolous lawsuits and the cost of defensive medicine, which real reforms could correct.
AAJ: This whole issue is a red herring, and proves opponents of current legislation have no intention of supporting health care reform. Even the head of the U.S. Chamber’s tort reform arm, Lisa Rickard, told The Hill that tort reform wouldn’t get any more votes on the bill: “There are so many issues that are in dispute in this bill,” she said, “that malpractice reform in and of itself isn’t going to overcome them.”
What’s notable about this op-ed is that it does not once mention patient safety. According to the Institute of Medicine, as many as 98,000 patients die every year from preventable medical errors, and many more are injured, costing more than $29 billion annually. Making medicine safer will lower costs, lead to fewer malpractice suits, and keep patients safer. Rep. Issa mentions none of this in his op-ed.
Rep. Darrell Issa (R-Calif.) is the ranking member of the Committee on Oversight and Government Reform.
ROLL CALL - Issa: Obama Must Push Tort Reform to Lower Health Costs
Feb. 25, 2010
By Rep. Darrell Issa
Special to Roll Call
As the administration and Congress try to hit the restart button on health care reform, it’s worth noting that one glaring omission from the debate has been tort reform. For all of the talk about making health care more affordable and lowering premiums and costs, it is inexplicable that this promising mechanism for cost-savings continues to be ignored by the president and Congressional Democrats.
AAJ: It is hardly a promising mechanism. According to the Congressional Budget Office, passing the most anti-patient tort law changes would save only one-half of one percent of all health care costs. The CBO also found some evidence that these tort law changes could increase patient mortality rate, which Rep. Issa fails to mention in either op-ed.
Defensive medicine, frivolous lawsuits and multimillion-dollar jury awards in malpractice cases have helped contribute to the soaring costs of health care.
AAJ: Each of these subjects will be addressed below, but assuming his three descriptions above are accurate (which they aren’t), the CBO still says it saves only one-half of one percent of all health care costs.
President Barack Obama himself has acknowledged that defensive medicine taxes the health care system, saying, “I’ve talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs,” yet, in an apparent self-contradiction, the president emphatically told the American Medical Association that he would not support caps on medical malpractice jury awards — an effective element of tort reform that has already reduced lawsuits and brought down health care costs in the states that have implemented the caps.
AAJ: Yes, caps have reduced the number of lawsuits. They have also made it practically impossible for severely injured patients to obtain any legal recourse. And it’s highly questionable that they have brought down the health care costs in states that implemented them. California and Texas are often cited by tort reform proponents as “models” for nationwide caps. Yet they have some of the worst health care, highest rates of uninsured, and most expensive markets. McAllen, TX, which is the focus of Atul Gawande’s New Yorker story, has the highest costs in the country yet the most anti-patient tort reforms in the country.
Reversing course and rewriting his own narrative at a recent White House press briefing, Obama said, “If it’s established that by working seriously on medical malpractice and tort reform that we can reduce some of those costs, I’ve said from the beginning of this debate I’d be willing to work on that.”
Why is this pertinent? Because when House Oversight and Government Reform Committee staff recently made an inquiry about litigation costs, the president’s own Health and Human Services Department responded that malpractice litigation reform was “not a priority with [the Obama] administration, so there is no further information on the topic.”
AAJ: We aren’t in the position to speak for the administration. However, President Obama did order the Department of Health and Human Services to solicit pilot projects on medical malpractice and patient safety. This is on-going.
When HHS says malpractice reform is not a priority of this administration, the president’s commitment to working with Congressional Republicans on a bipartisan basis seems insincere. A clarification from the administration would tell us if he truly desires bipartisan discussions or if this is just a public relations charade designed to make the American people think the White House is serious about finding bipartisan solutions.
The fact of the matter is that reining in defensive medicine can help reduce health care costs. A 2008 study by PricewaterhouseCoopers found that defensive medicine is a top area of wasteful spending in health care, accounting for $210 billion annually.
AAJ: Again, the most reliable source of this information is the CBO, which calculated the “direct” costs of the malpractice system (such as malpractice insurance) and “indirect” costs (such as so-called “defensive medicine”). They found the most anti-patient tort law changes would reduce health care costs by one-half of one percent, or $54 billion over 10 years, not even remotely close to the $210 billion annually that Rep. Issa and other tort reformers claim is possible. The PWC figure actually comes from data that has already been questioned and debunked previously by the CBO and Government Accountability Office.
And according to the Congressional Budget Office, legislation providing for caps on damages would “significantly lower premiums for medical malpractice insurance” by 10 percent to 30 percent. California, Georgia, Texas and 36 other states provide proof that capping noneconomic damages and controlling the growth of medical malpractice lawsuits can dramatically cut liability insurance premiums, thus passing the savings on to the insured.
AAJ: It’s clear that some physicians have malpractice premiums that are too high. But for some reason, opponents of health care reform continue to attack injured patients instead of looking at the insurance companies that are charging astronomical rates and reaping the profits. In reality, states without caps actually have lower malpractice premiums than states with caps. And insurance companise in states with caps have higher profits than states without caps. This is because they have absolutely no correlation; it’s the insurance cycle that creates periods of low or high rates. Additionally, Rep. Issa points out that 39 states already have caps. Since health care costs continue to skyrocket, this makes abundantly clear that further limiting the rights of injured patients won’t fix America’s broken health care system.
California was the first state to respond to the medical malpractice insurance crisis of the 1970s, when medical liability insurance premiums were so high that many physicians, particularly high-risk specialists such as OB-GYNs and neurosurgeons, were forced to close their doors. Abuse of the civil justice system, including malicious and frivolous malpractice litigation, had become so rampant that it was diminishing access to care for everybody. In 1975, California voters approved the Medical Injury Compensation Reform Act. MICRA caps noneconomic damages at $250,000, provides a statute of limitations on malpractice claims and allows for binding arbitration for disputing claims.
AAJ: In the 13 years after MICRA was passed, premiums rose 450 percent. Only until insurance reform was passed (Prop. 103) did premiums begin to decrease.
While medical malpractice premiums vary widely depending on location and specialty, rates in California are lower than in many other states. In Florida, for instance, premiums for OB-GYNs are as high as $214,893, whereas in California the average is $89,953.
AAJ: Florida has caps very similar to California. Why are there premiums so high? It’s because there is no correlation.
Premiums for other specialties including general surgery and internal medicine are also lower in California, sometimes as much as 50 percent less than in other states. In fact, MICRA has resulted in a stabilization of malpractice premiums, which have increased much more slowly than the national average. Since 1975, premiums nationwide have increased 420 percent, as opposed to just 168 percent in California.
AAJ: Once again, right after MICRA was passed, premiums for physicians actually went up. Only until insurance reform was passed several years later did premiums begin to decrease.
Prior to the passage of tort reform in Texas, one in four doctors faced a medical malpractice claim every year. The liability crisis had grown such that in 2003, Texas voters approved Proposition 12, which limited noneconomic damages in medical malpractice lawsuits to $250,000. The caps have led to fewer lawsuits and lower liability insurance premiums for doctors. The average malpractice award has decreased from $1.2 million to $880,000, and Texas’ largest malpractice insurer has lowered rates repeatedly, equaling a more than 50 percent decrease in rates since 2003.
AAJ: Texas also has the highest rate of uninsured and some of the worst health care outcomes in the nation. Today’s many injured patients have no legal recourse, and instead must rely on taxpayer-funded assistance to pay for medical bills.
In 2005, the Georgia Legislature passed comprehensive medical liability reform that included $250,000 caps on punitive damages and $350,000 caps on noneconomic damages. Since then, the average number of medical malpractice claims has decreased by 39 percent, from more than 1,128 in 2004 to 683 in 2008. Additionally, professional liability insurance rates for physicians in the state have decreased 18 percent since the reforms were enacted.
AAJ: Since Georgia imposed caps, premiums for doctors have risen eight times higher than the national average. In 2004, the year before the cap was enacted, Georgia’s premiums were 17.37 percent below the national average. In 2008, they were 0.33 percent higher than the national average. While Rep. Issa says the number of claims have gone down, the number of incidents of malpractice likely hasn’t, again proving why patient safety should be the number one concern.
The benefits of enacting tort reform now are clear. If the administration is serious about including real tort reform in a health care reform proposal, it should look to California, Texas and Georgia as case studies in medical malpractice reform that has lowered costs and reduced lawsuits. If the president wants proven bipartisan solutions that will substantially lower health care costs, he needs to focus on the facts and not his own ideological commitments or the special interests of trial lawyers. Tort reform works in the states that have tried it, and it will work nationwide to provide affordable, accessible coverage to every American.
AAJ: Of course, Rep. Issa throws in the proverbial attack on trial lawyers, although we are the only ones who represent people injured through no fault of their own. What’s notable about this op-ed is that it does not once mention patient safety. According to the Institute of Medicine, as many as 98,000 patients die every year from preventable medical errors, and many more are injured, costing more than $29 billion annually. Making medicine safer will lower costs, lead to fewer malpractice suits, and keep patients safer. Rep. Issa mentions none of this in his op-ed.
Rep. Darrell Issa (R-Calif.) is ranking member of the Oversight and Government Reform Committee and a member of the Judiciary Committee.
