Op Ed
Oct. 28, 2004

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Choice is key to lower health care costs
by Brent Tantillo

Health care costs are rising, doctors are quitting and neither presidential candidate gets the fix quite right: John Kerry wants to chuck the current system and provide universal health care coverage while George Bush’s solution is to chop off the medical liability system at its knees. At least President Bush’s plan would lower health care costs a bit, according to a recent study by the Rand Corporation.

President Bush supports Medical Liability Reform to rein in the costs of health care. The logic behind the plan is simple: If doctors and hospitals pay less in medical malpractice premiums then they will charge clients less, thereby cutting the astronomical growth rates of health care costs. To achieve this, the president would cap the amount plaintiffs may recover for non-economic damages such as pain, suffering and punitive damage awards. His proposal does not limit what juries may award to recompense doctor’s bills, lost earnings and wages, or rehabilitation expenses.

The Rand study finds that when California implemented such a system, injured patients’ recoveries dropped 15%, while plaintiff attorney fees dropped 60%. These numbers stand in stark contrast to the prevailing national trends, where median jury awards in medical-malpractice cases more than doubled in the last six years to nearly $1 million, according to Jury Verdict Research. Indeed, as a result of placing caps on non-economic damages, California’s malpractice premiums rose only one-third since implementing the system in 1975, while premiums nationally rose 437 percent.

According to figures from the National Association of Insurance Commissioners, California’s caps on non-economic damages has benefited its residents, as total insurance premiums in the rest of the U.S. have risen 750% since 1976, while California premiums over the same period rose only 245%. And for Californians injured by a doctor, malpractice claims are settled in one-third less time than in states without these caps, thereby offering relief to victims faster, says Richard E. Anderson, chairman of the Doctors’ Company for the Physician Insurance Association of America.

Yet, despite irrefutable evidence that Medical Liability Reform would significantly lower the cost of health care, nearly all polls show a majority of Americans believe John Kerry and John Edwards are best fit to solve problems in the health care system. Why?

While voters know that the medical liability system and its army of trial lawyers are counterproductive and corrupt, they’ve reigned in their enthusiasm for reforms asking them to sacrifice their rights to make the world safer for the Fortune 500 and the rich doctors comprising the American Medical Association. Cutting non-economic damages might work, but it does not conform to America’s sense of justice, which demands that doctors, hospitals and HMOs pay millions if they’re guilty of malpractice. So voters didn’t grumble when the likes of John Edwards — the Democratic Party’s nominee for vice president — were crowned with white hats and titled “defender of the consumer.” A designation, ironically, first bestowed on (if not invented by) presidential candidate Ralph Nader, whom both Kerry and Edwards are encouraging Americans to vote against.

Fortunately, a new approach to medical liability reform (which the business community has largely resisted) would give plaintiffs wronged by doctors the choice of a fair award now rather than giving half of any money won at trial to lawyers later.

While the reform is not new — it was introduced by Rep. Richard Gephardt (D-MO) nearly 20 years ago — its departure from traditional tort reform paths makes it revolutionary. The proposal requires malpractice claimants seeking pain-and-suffering damages to prove their cases under a strict “beyond any reasonable doubt” standard, but only if they had first received and rejected defendant offers to pay lost wages, un-reimbursed medical costs and reasonable hourly attorney fees, all of which must be paid within six months of filing the complaint. If the defendant fails to make an early offer within that period, the plan retains the right to use the court system to press for a bigger settlement.

This new agenda bypasses the huge delays and costs of the tort system and achieves great savings by substantially reducing the legal fees now paid to malpractice plaintiff and defendant counsel. At the same time, the reform preserves access to the tort system when defendants fail to make an offer within six months or gives defendants the choice to pursue cases where clear malpractice can be proven.

By implementing the reform, everybody wins. Its incentives will enable health care provider defendants to make early offers when serious claims are brought against them, but they will retain the choice to resist frivolous or otherwise unworthy claims by not making a settlement offer at all. Concomitantly, patient plaintiffs will have the choice to be paid now should they choose to take an early offer or later if they prevail in court. And consumers win because the reform will substantially reduce insurance costs as doctors no longer have incentives to practice unnecessary and costly medical procedures to insure against malpractice suits.

Here’s hoping that whoever wins Nov. 2 will give voters this vital choice.

Brent Tantillo is Deputy Director of the Project for Civil Justice Reform at Hudson Institute in Washington, D.C.


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