Healthcare Business News

CBO says tort reforms could reduce deficit, healthcare spending

By Jennifer Lubell
Posted: October 9, 2009 - 3:00 pm ET

Tort reforms could potentially reduce the federal deficit and reduce total healthcare spending, the Congressional Budget Office reported.

In a letter addressed to Senate Finance Committee member Orrin Hatch (R-Utah), the CBO indicated that implementing a “typical” package of tort reform proposals nationwide would reduce total national healthcare spending by about 0.5%, or about $11 billion in 2009.

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“That figure is the sum of a direct reduction in spending of 0.2% from lower medical liability premiums and an additional indirect reduction of 0.3% from slightly less utilization of healthcare services,” the letter stated. These estimates take into account the potential cost savings accrued by medical malpractice reforms that have already been adopted in many states.

In addition, the CBO and the staff of the Joint Committee of Taxation jointly estimated that a typical set of tort reform proposals could reduce federal budget deficits by roughly $54 billion over the next 10 years.

“I think this response from the CBO confirms that there is a growing problem regarding the costs of healthcare lawsuits,” Hatch said in a written statement. The Utah senator has long maintained that making certain changes to the tort system such as implementing caps on noneconomic damages could reduce the cost of healthcare services.

Less evidence exists on whether tort reform could impact health outcomes, however, as many studies of malpractice costs do not examine such outcomes, CBO stated.

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