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Alan Miller: Now Is The Time For Medical Malpractice Reform

Now that President Barack Obama has made healthcare a priority for his administration, we should all hope that his plan to provide greater access to health insurance and lower the cost of healthcare will also include tort reform for medical malpractice lawsuits.

Without much-needed reforms to limit jury awards for non-economic damages, the cost of malpractice insurance will continue to rise. That, in turn, will increase the exodus of physicians from states without limits. And large jury awards make healthcare needlessly expensive for all Americans.

We need a uniform, national solution to the problem. It is time for this country to develop a plan that sets limits on medical malpractice awards and adopt that plan nationwide.

Over the past several years, many states have imposed their own limits on non-economic damage awards in malpractice lawsuits. While those reforms have produced positive results in the states that have adopted them, neighboring states that have not enacted reforms have continued to suffer.

Physicians from states without malpractice reform have either abandoned or restricted their practices or moved to states with lower rates for malpractice insurance. In either case, the result is that residents of states that have not enacted tort reform have fewer physicians to provide treatment, and have higher expenses for their healthcare.

Tort reform does work. The state of Texas enacted malpractice reform legislation in 2003 that limits jury awards for non-economic damages to $250,000. Since then, physicians have seen their malpractice insurance rates drop significantly. A 2008 survey by the Texas Medical Association showed that 90 percent of physicians in the state said they were more comfortable practicing medicine in Texas now than they were before the tort reform was enacted.

In addition, the Texas survey showed that since reform went into effect, the number of malpractice lawsuits has declined, physicians are able to purchase new equipment and expand the procedures they offer and are more willing to treat high-risk patients. The results in Texas clearly show that medical malpractice reform does work.

Malpractice reform will do more than lower costs for physicians. It will help lower the overall cost of healthcare for everyone and help physicians provide better care for patients.

A recent survey by the Massachusetts Medical Society and the University of Connecticut Health Center revealed that among physicians surveyed, 83 percent reported that they had practiced defensive medicine. That study showed that an average of 28 percent of tests, procedures, referrals and consultations were ordered for defensive reasons. The study also concluded that 13 percent of all hospitalizations ordered by physicians were ordered for defensive purposes.

Such care is expensive as well as unnecessary. Defensive medicine – when physicians order more tests or procedures than medically necessary in order to cover themselves in the event of a lawsuit – has been estimated to cost between $100 billion and $178 billion per year, according to a study by Daniel P. Kessler and Mark B. McClellan of Stanford University. That is an additional $1,700 to $2,000 paid every year by the average American family for unnecessary healthcare.

In states such as California, which enacted limits on jury awards for malpractice in 1975, healthcare costs are between 5 and 9 percent less than other states because physicians in California and other states with similar reforms do not practice as much defensive medicine.

A common argument from trial lawyers and others opposed to reform is that the possibility of large jury awards acts as an incentive for doctors to provide better quality care and avoid medical errors. Experience has shown that is not the case, as the incidence of malpractice has not increased in states that have enacted reform. A 2006 study by the New England Journal of Medicine showed that in about 25 percent of malpractice lawsuits that resulted in jury awards, there was no identifiable medical error. And many lawsuits are settled out of court to avoid the cost of litigation even when no error was committed.

Furthermore, large awards for pain and suffering do not compensate plaintiffs as much as juries may think they do. The New England Journal of Medicine study also showed that for every dollar awarded to a plaintiff in a malpractice suit, 54 cents went to lawyers, expert witnesses, courts and toward other administrative expenses.

Tort reform has long been seen as a partisan issue, with Republicans firmly in support and Democrats opposed. Efforts to deal with the problem during President George W. Bush’s first term, for example, were met with harsh opposition from Democrats and the trial lawyers who donate heavily to their campaigns.

Recently, however, the partisan divide appears to be shifting. In a speech to business leaders in March, President Obama signaled a willingness to discuss the issue when he said that ideas that can reduce the cost of healthcare, such as “medical liability issues – I think all those things have to be on the table.” However, President Obama is developing a pattern of speaking one way and acting another.

Senator Ron Wyden, (D-Ore.)has introduced a bill that includes incentives to encourage states to enact malpractice reforms. Senate Finance Committee Chairman, Max Baucus, also a Dem. Montana, has shown awareness that medical premiums and defensive medicine are driving up cost needlessly. Senator Baucus has proposed an alternate to litigation, “health courts” whose judges have healthcare expertise. This would eliminate the practice of plaintiff’s attorneys bringing injured children into court to prey on the sympathy of unsophisticated juries to garner high rewards. (See 2004 VP candidate Sen. Edwards, D-North Carolina – ex trial lawyer)

“I think it’s essential for there to be enduring reform, reform that will stick and will get a significant bipartisan vote in the United States Senate,” Wyden said.

Continued Republican support for tort reform, coupled with a new willingness among some Democrats to discuss the issue provides hope that the nation may finally be ready to tackle this problem. At a time when rising healthcare costs are putting a financial drain on families and businesses across America, national medical malpractice reform is essential for the future of our nation.

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Alan B. Miller is chairman and chief executive officer of Universal Health Services, Inc., headquartered in King of Prussia, Pa.
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