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Tort Reform Doesn’t Cut Health Costs

Sunday’s Lexington Herald Leader contained an editorial commenting on a New York Times article dealing with the increasing costs of health care. Here it is:

Tort reform doesn’t cut health costs

Sen. Mitch McConnell’s No. 1 idea for fixing what ails our health care system is to limit the rights of those maimed by medical malpractice.

But states that have enacted curbs on what McConnell calls “junk lawsuits” have yet to see the cost savings promised by McConnell and other proponents of tort reform.

On the contrary, Texas capped malpractice damages in 2003 only to experience a steep rise in health insurance premiums and medical costs.

Medicare spending rose 24 percent in the three years after punitive damages were capped at $250,000, according to the Dartmouth Institute for Health Policy.

One of the most expensive health-care markets in the country is the Texas city of McAllen. Only Miami, which has much higher labor and living costs, spends more per person on Medicare.

Boston surgeon Atul Gawande visited McAllen and wrote an account for The New Yorker, “The Conundrum: What a Texas town can teach us about health care” that’s required reading for anyone trying to understand this admittedly baffling topic.

One night at dinner with six local doctors he asked why the average cost per Medicare enrollee had soared from $4,891, about the national average in 1992, to almost twice the national average of $15,000 per enrollee in 2006.

For perspective, the per capita income in McAllen is only $12,000.

Several of the physicians said doctors practiced defensive medicine to protect themselves from the city’s especially aggressive lawyers; they ordered extra tests and procedures which drive up costs.

But what about the strict limits on malpractice damages. Haven’t lawsuits gone down?

“Practically to zero,” one of the docs said.

What’s finally revealed is that doctors in McAllen are heavily invested in medical technology and imaging and surgery centers. They order lots of tests and procedures because they directly profit from them. They think of what they do as a business.

The critical choice facing this country is whether health care will continue to go the way of McAllen or whether it can be guided toward a Mayo Clinic model in which doctors work together to deliver the best care with the fewest tests and procedures.

We should all hope the Mayo model wins because the outcomes for patients are far better. Also, at the current rate, health care costs will soon eat up so much of the federal budget that this country will no longer be able to afford to defend itself.

The Texas experience with malpractice is not unique. Researchers at the University of Alabama at Birmingham surveyed 27 states that have limits on non-economic damages and discovered no savings for health care consumers.

McConnell is offering a few other of what he calls “common sense” ideas. He favors some insurance reforms, such as covering pre-existing conditions, and incentives for living a healthful lifestyle.

He also says individuals buying insurance should be entitled to the same tax deductions as companies buying insurance for their employees.

McConnell acknowledges that health care reform is necessary, but his prescription is mostly a placebo.

To read the New Yorker article, “The Conundrum: What a Texas town can teach us about health care.”


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