In its recent analysis of tort reform, the Congressional Budget Office concluded that limiting medical malpractice lawsuits would reduce the federal deficit by $54 billion over the next 10 years.
The CBO says that tort reform would cut costs by limiting the use of diagnostic tests and other services health care providers and doctors use to reduce exposure to lawsuits.
The recent health care bill passed by the House specifically prohibits financial incentives for states that implement caps or limits on malpractice awards and attorneys fees.
“These are two of the most effective remedies that states have implemented to stop abusive malpractice cases,” said Hans von Spakovsky, senior legal fellow for the Heritage Foundation. “The results have been reduced malpractice premiums, reduced malpractice direct and indirect costs, and reductions in the costs of defensive medicine practiced by doctors.”
CBO Director Douglas Elmendorf told lawmakers that recent research has shown that lowering the cost of medical malpractice tends to reduce the use of health care services.
The analysis was not tied to specific legislation, but cited reform ideas such as limiting pain-and-suffering awards to $250,000, capping punitive damage awards at $500,000, limiting attorneys fees, and implementing a one- to three-year statute of limitation.
“The CBO study very much underestimated the savings from effective malpractice reform,” von Spakovsky said. “The estimates for the costs of defensive medicine alone range from $191 billion to $239 billion in 2008.”
The CBO found that health care providers will spend about $35 billion on malpractice liability this year alone, including premiums and awards. The CBO believes their proposals would reduce national health care spending by about 0.5 percent, or $11 billion in 2009. That includes the reduction in malpractice premiums, as well as a 0.3 percent reduction in spending from providers ordering procedures to avert lawsuits.
“The disincentive for effective malpractice reform contained in the health care bill will do the exact opposite of what the sponsors are claiming the bill is intended to achieve — it will lead to increased health care costs,” von Spakovsky said. “It has terrible implications for discouraging states from implementing tort reform and is just another sign of how beholden Democrats are to the trial lawyers’ lobby.”
