Medical malpractice costs average about $55.6 billion annually, or 2.4% of annual healthcare spending, according to a Health Affairs analysis.
The estimate includes defensive-medicine activities, such as ordering tests or treatments by physicians in order to avoid lawsuits, which alone costs about $45.6 billion a year, the study found.
The real cost of medical liability has been widely debated, said the study, published in the September issue of Health Affairs. Some studies have shown that on one hand, healthcare “is rife with errors and avoidable injury to patients. On the other, doctors and hospitals fear frivolous lawsuits and resent high malpractice insurance premiums,” according to the findings.
To get more concrete answers, the study's researchers analyzed different areas of the medical liability system such as payments made to malpractice plaintiffs, defensive medicine and administrative costs, and the costs of lost clinician work time.
“Physician and insurer groups like to collapse all conversations about cost growth in healthcare to malpractice reform, while their opponents trivialize the role of defensive medicine,” said Amitabh Chandra, a study author and professor of public policy at Harvard's Kennedy School of Government. “Our study demonstrates that both these simplifications are wrong—the amount of defensive medicine is not trivial, but it's unlikely to be a source of significant savings.”
Tort reforms such as capping noneconomic damages could reduce liability costs, but are likely to have little effect on overall healthcare spending, the study found. In the meantime, reform proposals such as moving away from fee-for-service reimbursement could have a greater impact.
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