Medical malpractice, tort reform and defensive medicine

If you really want to save money in health care, fix the malpractice system and reduce the amount spent on defensive medicine, right?

That was one popular line of argument (with doctors, hospitals administrators and insurers) that gained attention during the debate over health reform. It has also been a frequently heard argument in the Philadelphia region one of the epicenters of skyrocketing cost and the malpractice-tort reform debate for more than a decade.

But how much is really spent on medical malpractice and how much would tort reform really save?

A study in the journal Health Affairs by experts from Harvard University and the University of Melbourne in Australia reports that the annual cost spent on medical liability, including defensive medicine, in the U.S. in 2008 was $55.6 billion. That’s a lot of money by any measure, but just 2.4 percent of America’s national health bill – $2.40 of every $100, said the researchers, who included Harvard surgeon Atul Gwande.

And the bulk of that total – $45.6 billion – was an admittedly rough estimate of defensive medicine costs with actual payments for medical malpractice totaling $5.7 billion and for legal and other costs estimated at $4.1 billion.

Two other studies in the September issue of Health Affairs suggest changes to the legal system would do little to reduce the $45 billion spent on defensive medicine. Those studies found that several oft-proposed “tort reforms” would not stop doctors from ordering tests and treatments based on fear of lawsuits.

Researchers from the University of Southern Maine estimated that a 10 percent decline in medical malpractice premiums for doctors would reduce cost of care by less than 1 percent. “These savings are lower than most previous estimates, and they suggest that the presumed impact of tort reform on health care cost may be overstated,” the researchers said.

A study by researchers from Harvard, the University of Iowa and the Center for Studying Health System Change in Washington compared the amount of defensive medicine practices in states with and without commonly tort reforms such as caps on awards for pain and suffering and other “non-economic” damages. The researchers found that there was little difference in the “levels of malpractice concerns” of doctors and hence on the practice (or cost) of defensive medicine.

But you know what they say about saving money, a billion here and a billion there and eventually you get real money.

For more on the cost of health care in America check out posts by Check Up guest blogger Robert Field of Drexel University here, including an analysis of why our system of care is so expensive compared with the rest of the world.

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