Wednesday, January 14, 2004

Health Care Marketplace

Capping Awards in Medical Malpractice Lawsuits Would 'Do Little' To Slow Health Spending, CBO Report Says

Legislation to cap damages in medical malpractice lawsuits would "do little to hold down health care spending" or eliminate the practice of "defensive medicine," according to a Congressional Budget Office report released last week, CongressDaily reports (CongressDaily, 1/13). The report found that malpractice insurance premiums have increased in recent years in part because insurers have experienced increases in claims costs, as the amounts of damage awards in malpractice lawsuits have increased. However, the report found that malpractice insurance premiums also have increased because of reduced income from insurer investments and short-term factors in the insurance market. The report found that although malpractice insurance premiums are lower in states with caps on damages in malpractice lawsuits, "even large savings in premiums" would have a small impact on total health care spending because malpractice insurance costs account for less than 2% of spending (CBO report, 1/8). In addition, the report found that a cap on damages in malpractice lawsuits would not likely end the practice of "defensive medicine" -- in which physicians order more procedures and tests than are medically necessary to avoid malpractice lawsuits -- because "physicians who practice defensive medicine may do so less because they fear liability than to generate more income," CongressDaily reports (CongressDaily, 1/13). The report did not reach a conclusion on whether caps on damages in malpractice lawsuits affect access to health care. According to the report, although the General Accounting Office confirmed cases in which access to emergency surgery and newborn delivery was reduced in "scattered, often rural areas where providers identified other long-standing factors that affect the availability of services," the GAO also found that many reported shortages of health care services "could not be substantiated" or "did not widely affect access to health care" (CBO report, 1/8).

Medical Errors
The CBO report also found no evidence that the current medical liability system prevents medical errors, a claim that some opponents of caps on damages in malpractice lawsuits have made (CongressDaily, 1/13). The report said that the medical liability system may not prevent medical errors because health care providers are "generally not exposed to the financial cost of their own malpractice" and because "very few medical injuries ever become the subject of a tort claim" (CBO report, 1/8).