Medical Malpractice


In his State of the Union address last night President Obama mentioned a key issue for property/casualty insurers: medical malpractice reform.

I’m willing to look at other ideas to bring down [healthcare] costs, including one that Republicans suggested last year – medical malpractice reform to rein in frivolous lawsuits.”

President Obama’s comments follow landmark healthcare reform that failed to consider malpractice reform.

So what are we to make of this latest call?

Fortunately a number of commentators and bloggers have done the analysis. Here’s their take on the matter:

Over at Forbes Health Dollars blog, David Whelan says the President’s endorsement of malpractice reform warrants skepticism and offers some circumstantial evidence to support his view. His conclusion is that we shouldn’t get too excited just yet.

The Fact Checker at the Washington Post makes the point that President Obama favors certain ways of trying to lower costs related to malpractice, such as state incentives aimed at curbing lawsuits – rather than federal damage caps that Republicans favor.

Meanwhile, The Hill’s Healthwatch blog reports that senior Senate Democrats are highly skeptical of the President’s call for medical malpractice reform. Senator Patrick Leahy (D-VT), chairman of the Senate Judiciary Committee, is quoted saying he would only support such reform if it was part of broader legislation that included other fixes such as a controversial proposal to repeal insurers’ exemption from federal antitrust rules.

We should mention that numerous studies have shown that tort reforms, particularly caps on non-economic damages, are a key contributor to lowering health care costs.

Check out the I.I.I. backgrounder on medical malpractice.

Studies have shown that tort reforms, particularly caps on noneconomic damages, are a key contributor to lowering medical liability claims and costs and ultimately healthcare costs.

Better risk management by hospitals – such as prompt disclosure of medical errors — is also being shown to help reduce these costs.

The Annals of Internal Medicine reports that during the period in which a program was implemented at the University of Michigan Health System (UMHS) to fully disclose medical errors to patients and offer compensation, there was a reduction in the number of new claims filed and a decline in lawsuits.

After the program was implemented, the average monthly rate of new claims decreased from 7.03 to 4.52 per 100,000 patient encounters.

The average monthly rate of lawsuits decreased from 2.13 to 0.75 per 100,000 patient encounters, while the median time from claim reporting to resolution declined from 1.36 to 0.95 years.

There are a couple of caveats to the study findings. As noted by the Wall Street Journal health blog, whether the costs and number of claims declined as a result of the program is not clear, since there was no control group.

In addition, malpractice claims in general were on the decline in Michigan in the latter part of the study period.

Still, the fact that total liability claims and liability costs did not increase during the implementation of the UMHS program is a positive.

Medical errors are extremely costly. A study recently completed by consultants with Milliman and commissioned by the Society of Actuaries (SOA) estimated that measurable medical errors cost the U.S. economy $19.5 billion in 2008.

Experts said the study findings highlight the need to reduce medical errors and improve quality and efficiency in American healthcare.

Check out I.I.I. information on medical malpractice.