Malpractice Myth and reality in SOTU

One of the most frustrating things about Bush's presidency for those of us who study public policy is the utter disdain that Bush shows for smart and sensible policy in obeisance to his ideological beliefs.  His proposed caps on malpractice are a case in point.  What this plan does is limits the redress for legitimate victims of medical mistakes.  It does nothing to reduce medical errors or actually limit medical costs.  In a terrific book, the Medical Malpractice Myth, by Tom Baker puts the lie to these malpractice cap policies.  The problem is not that jury awards are too high, it is that there is way too much malpractice.  Furthermore, the evidence suggests that malpractice (including so-called “defensive medicine”) makes up an incredibly trivial portion of our overall health care spending.  Consumers Union (publisher of Consumer Reports) nicely summarizes:

Furthermore, the President is expected to call
for a controversial plan to limit the legal damages awarded to patients
in medical malpractice cases. Putting caps on such damages will not
solve the problem of rising malpractice insurance rates. Such limits
are not only ineffective; they are unfair to the patients who are
injured and to the families of those who die because of grossly
negligent behavior by health care providers. There is no guarantee that
this plan will lower rates. It does nothing to enhance patient safety
or reduce medical errors, and it puts an unfair burden on innocent
victims of malpractice.

Every ten years or so, we hear about a medical malpractice insurance
“crisis,” eventually followed by an evening out and lowering of medical
malpractice insurance rates. The reason is that insurance companies
rely on both premiums and investment earnings to pay claims. When the
stock market is doing well, insurance companies often lower premiums to
the point where they are unprofitable, simply because they can invest
those premium dollars in the market and make money. When the stock
market falls, as it has in the last two years, premiums go up.

Rather than support this proposal, Congress should help doctors by
forcing insurers to better manage malpractice premiums, spread risk
among doctors for the high cost of insuring high risk specialties, and
force insurance companies to make public their insurance practices.
Congress should look at repealing the insurance industry's special
exemption from antitrust suits and consider creative ideas such as the
possibility of a fair and equitable no-fault system for malpractice


About Steve Greene
Professor of Political Science at NC State

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