Could it really? And by how much?
Bentley says on his website a $250,000 cap on non-economic damages is necessary to make significant gains in health care spending. Research from a University of Alabama at Birmingham professor and the Congressional Budget Office, however, point to large decreases in malpractice insurance premiums, but little impact on overall health care spending.
Bentley’s policy idea is rooted in a debate that has been occurring on and off for more than 30 years. This issue is also filled with conflicting research from various groups, many of whom have an economic interest in the outcome.
Part of each patient’s doctor bill covers the physician’s expenses for purchasing medical malpractice insurance. Tort reform proponents say that establishing caps on malpractice lawsuits keeps the doctor’s insurance premiums from rising sharply, which means cheaper, more efficient health care. Like Bentley, the proponents also say doctors often practice defensive medicine, or the act of ordering unnecessary procedures, simply to safeguard against potential lawsuits.
Opponents say that the small gains made by tort reform are overshadowed by the restrictions the legislation places on legitimate malpractice suits.
The standard used for the debate is an act passed in California called the Medical Injury Compensation Reform Act of 1975, which set a $250,000 cap on non-economic damages. Non-economic damages can be described as money given to a plaintiff that is beyond what he can prove he or she lost due to the injury.
A 2009 American Medical Association report regarding caps on non-economic damages pulled findings from various studies, all of which found a decrease in insurance rates for states that enacted tort reform. For example, the report cited a study that found, in states that enacted the caps, insurers had a 17 percent decrease in losses compared to insurers in states without the caps. The report also included a study that found a 5 percent to 9 percent reduction in expenditures for Medicare beneficiaries with heart disease in states that enacted tort reform.
The Congressional Budget Office in a report to Sen. Orrin Hatch, R-Utah, in 2009 found that implementing tort reform nationwide would result in a 10 percent reduction in medical liability insurance. The office estimated the direct costs of medical malpractice payments in 2009 made up $35 billion, or 2 percent, of total health care expenditures. The report said the 10 percent drop in insurance rates would reduce total national health care expenditures by about 0.2 percent.
In a 2003 report, the CBO found that, while evidence shows premiums for malpractice insurance are lower in states with tort reforms, evidence for defensive medicine, increased doctor supply or increased medical injuries are weak or inconclusive.
“It's not a panacea that's going to produce great gains, but it's going to stabilize the market,” said Mark Jackson, director of legislative affairs for the Medical Association of Alabama.
Jackson said, however, that all of the doctors he deals with say they practice defensive medicine.
“The doctors tell us that goes on all the time so it's got to have an impact,” he said.
Dr. Meredith Kilgore, who along with several researchers has studied tort reform, said his team’s research was unable to find any significant effects from defensive medicine. He said that does not mean the effects are not present, but it likely means the effects are very small.
Kilgore said an important fact to remember regarding tort reform, and especially defensive medicine, is that the gains may be coming at the expense of patients.
“You're denying people the right to recover damages,” he said. “Now, depending on your viewpoint, that might or might not be a good policy.”
He said defensive medicine is often viewed as wasteful spending, but these could be procedures that are beneficial to patients.
When lawmakers and voters are looking into the issue, Kilgore said, it is important to look for research data that is unbiased and published in peer-reviewed research journals. He said many of the studies floating around are funded by the organizations that are pushing for or against the reform.
“They already know the answer, they don’t want to be confused by the data,” he said.
Alabama’s 1987 tort reform law included a $400,000 cap on non-economic damages and a $1 million cap on wrongful death lawsuits. However, the Alabama Supreme Court ruled those two sections of the law unconstitutional.
Jackson, however, said several provisions in the law are still in effect and help curb some of the costs associated with malpractice litigation.
He said the provisions include limitations on the county in which the suit can be filed as well as stricter criteria for expert witnesses and evidence. He said, because of these restrictions, the state of Alabama has fewer malpractice suits and lower malpractice insurance rates than neighboring states without these kinds of measures.
Kilgore said, overall, he is skeptical a $250,000 cap would make significant gains in Alabama’s health care costs. “It's rather trivial in the grand scheme of things,” he said.
