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Brett Emison
Brett Emison
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Did You Know… Malpractice Suits Play a Surprisingly Small Role in Our Rising Health Care Costs?

3 comments

With the debate over America’s health care system far from breathing its last, the American Association for Justice released its report recently, Medical Negligence: The Role of America’s Civil Justice System in Protecting Patients’ Rights. In it are enlightening facts about the myths of "tort reform," and ways that the current debate is masking the threats to patient safety that are actually real.

Chief among those myths that are exposed is that of medical malpractice lawsuits, and how in actuality they do not cripple the community of U.S. medical professionals, as some tort reform proponents would have us believe. Taking on the myth that medical malpractice litigation is the chief cause of insurance costs rising, the report shows instead examples of how insurance companies refuse to pay just claims for medical bills and how many in the industry are seeking to take away the legal rights of patients who have legitimate claims related to defective medical devices or dangerous drugs.

"One of the principal myths surrounding medical malpractice is its effect on overall health care costs," the report states. "Medical malpractice is actually a tiny percentage of health care costs, in part because medical malpractice claims are far less frequent than many people believe. In 2004, the CBO calculated malpractice costs amounted to ‘less than 2 percent of overall health care
spending. Thus, even a reduction of 25 percent to 30 percent in malpractice costs would lower health care costs by only about 0.4 percent to 0.5 percent, and the likely effect on health insurance premiums would be comparably small.’

"Five years later, the CBO revisited the issue of medical negligence costs. This time, they attempted to account for the indirect costs of medical negligence, mainly the idea that doctors order extra tests to avoid liability. Again, the CBO found that tort reform would only save 0.5 percent of all health care costs."

Shedding light on more legitimate concerns for the health care industry, the tiny percentage of health care costs associated with malpractice claims is further put into context when compared to the profits of the hospital and insurance industries. The health insurance industry’s profits rose by 56% in 2009, according to the report. The top five for-profit health insurers made a whopping $12.2 billion. Meanwhile, 2.7 million Americans found their coverage dropped. Similarly, the medical malpractice insurance industry, while far smaller than the health insurance industry, has enjoyed remarkable profits in recent years.

"The top ten medical malpractice insurance companies alone made over $1 billion in profit in 2009," the report says, gleaning statistics from the National Association of Insurance Commissioners and other industry sources. "The average profit rate of the top 10 medical malpractice companies was eight times greater than the average for the Fortune 500. In fact, only five Fortune 500 companies could match the average profit level of the biggest medical malpractice insurers."

As you listen to the debate on health care and its real costs that are passed on to consumers, it’s good to get the other side of the story when the tort reform movement is concerting an assault on a problem that, at best, disguises the real threat to Americans’ pocket books and health. Hats off to the AAJ for playing a key role in bringing some of these facts to light.

(c) Copyright 2010 Brett A. Emison

3 Comments

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  1. Joe K. says:
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    AS important as stabilizing medical malpractice insurance rates is to trying to lower overall healthcare costs is, more importantly it dire in order to maintain access to quality care. Whether you believe medical malpractice cases are running rampant or you believe that they are overstated the fact of the matter is that it does play an important factor into a doctor’s practice and it will have an impact on whether not a young man or woman decides to get into the medical field. http://www.equotemd.com/

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    Brett: Good article. Please see my post earlier where I gave the statistics for North Carolina, repeated below:
    From the New England Journal of Medicine:
    1. A recent article in the New England Journal of Medicine shows that 4,000 patients die and 5,700 patients are permanently injured in NC hospitals EVERY YEAR because of preventable medical mistakes.
    2. The number of medical malpractice lawsuits filed in NC has decreased over the last few years – WITH NO “REFORMS.” In 2007-09, the annual average of malpractice filings was 465 – which was 22.5% lower than the annual average in the preceding nine years.
    3. The annual number of malpractice lawsuits (465) is less than 5% of the 9,700 patients killed or permanently injured every year because of medical malpractice. In other words, only 1 in 20 patients who are severely harmed by a preventable medical mistake files suit.
    4. While the number of malpractice lawsuits has been DROPPING, the number of doctors in NC has been INCREASING. Between 1998 and 2008, the total population in NC grew by 18%, while the physician population grew by 29%. Your statement that doctors are fleeing our state is simply not true.
    5. NC juries are reasonable in awarding damages. In the 54 malpractice cases in which the patient won at trial and obtained a verdict on damages from 1998-2009, the median jury award was only $320,000.
    6. Medical malpractice premiums for NC doctors have decreased, while the malpractice insurance companies have made record profits.
    7. The average liability premium for internists, general surgeons and OB/GYNs in 2010 was 15% lower in NC than in states with caps on damages. ($37,150 vs. $43,647)

    As a fellow NC lawyer said, There is a problem in NC, but it’s not a problem with the patients, nor is it a problem with their lawyers. The problem is 9,700 patients severely harmed each year because of preventable medical mistakes.

    Also recommend the ABC News story http://abcnews.go.com/Health/hospital-errors-common-underreported-study/story?id=13310733 that quoted the Health Affairs blog http://healthaffairs.org/blog/2011/04/07/new-health-affairs-hospital-errors-ten-times-more-common-than-thought/ which said that hospital errors occur in ONE-THIRD of hospital admissions, more than TEN time what was previously thought.

  3. Jim O'Hare RPLU AIC IAS says:
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    Connecting the high cost of healthcare to malpractice is exactly what healthcare lobbyists engineer. Huge monthly premiums to satisfy an unreachable deductible and copays- the perfect business model. It is catastrope insurance not health care.

    The high cost of healthcare is a stand alone problem because McCarron Ferguson prevents competition. It was created in 1945 for reasons that no longer exist. Data sharing was thought to be collusion back then. These companies are exempt from anti trust. like baseball and med mal companies. Why? We’d still be in model T’s without Henry Ford competition.

    No body is in charge of counting deaths due to medical malpractice. If there was, the plaintiffs bar would be lining up outside that door. There is no med mal coroner,no running tally, think about it.

    Yes there is too much med mal, the easy fix is better staffing and shorter shifts. The 72 hr resident shift is stupid and not a right of passage, a 2 year hazing tradition propagated through attendings. Get more nurses, shorter shifts.

    26 years doing med mal claims => poor communication, related to fatigue generates the majority of incidents, in my view,the fulcrum for negligence.

    regards
    Jim O’Hare RPLU AIC AIS
    Director of claims
    Medicus Insurance company