The political game of tag that medical malpractice reform has become is being played again this spring. As usual, the House earlier this month passed a bill severely restricting the rights of plaintiffs to recover damages from medical errors, with mainly Republicans voting in favor. The Senate will soon reject it, with Democrats leading the opposition. Senate Majority Leader Bill Frist (R-Tenn.) has vowed to hold Democrats' feet to the fire every two months with a vote on some form of tort reform. It seems that Frist believes voters are ready to ignore Iraq and the economy and start focusing like a laser beam on the question of punitive damages.
Watching this aimless parrying is potentially coma-inducing, but something else keeps me awake. There really is a crisis in the availability of affordable malpractice insurance and there are some things that could be done right now to start to solve it but the tort reform advocates refuse to budge. For them, it's a $250,000 limit on noneconomic damages or bust. Not quite something Teddy Roosevelt might have cried in leading the charge up San Juan Hill.
Face it, tort reformers. The reports are in, the facts are on the table, and that liability limit you're so fixated on won't get passed and wouldn't solve anything if it did. All it would accomplish is to keep children, retirees and homemakers-who are limited in getting real economic damages-from getting the funds they need to recover from serious medical errors. Remember that the $250,000 limit is based on a 1975 landmark law in California. Adjusted for inflation, it should be $855,000 today.
Two studies last year by the General Accounting Office, others reported in academic journals and analyses by insurance industry experts find little or no correlation between limits on pain and suffering and lower malpractice rates. The far bigger problem is the nature of the malpractice insurance industry, which sells artificially low-cost policies when the stock market is riding high, makes highly speculative investments with reserves and then loses when the markets decline. The insurers then either leave the market or pass on their losses to doctors and hospitals through higher premiums. Recently, reinsurers, who are needed to cover huge claims, have gotten gun-shy about the malpractice industry.
Yes, the most recent GAO study found that recent increases in malpractice premiums were somewhat lower in states with caps on non- economic damages, but it also found that other market factors were as likely to have played a role in the lower premiums as so-called tort reform. Weiss Ratings, an independent firm that does analyses for financial services companies, found that what savings malpractice insurers got from caps on non- economic damages are often not passed on to policyholders.
Moreover, the GAO report noted that Minnesota, which has the lowest premiums in the country, has no caps on damages and no crisis of insurance availability. What Minnesota does have is a model for real tort reform. It is one of a number of states that screens the viability of initial claims of malpractice. Potential suits are screened in a discovery system that allows lawyers and insurers to assess the claims' viability before they reach a court. Frivolous lawsuits, which account for a large part of the costs paid out by insurers, are often weeded out by such systems.
Further reforms would have to take place at the state level, through better policing of insurance industry practices. Insurers should be mandated to have rates that reflect their exposure to lawsuits and force them to invest their cash more wisely. Premium increases could be tied to actual statewide claims history.
Those are changes that would actually result in lower costs to healthcare providers, which makes me wonder why they are participating in the cynical political gamesmanship known as tort reform.