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AAOS Now

Published 9/1/2009
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David H. Sohn, JD, MD; Javad Parvizi, MD, FRCS; Charles S. Day, MD, MBA

The need for tort reform in the current healthcare debate

Why we can’t forget tort reform

The U.S. healthcare system will likely undergo considerable change this year. Efforts to increase access to care and to reduce overall costs have created a strong push for healthcare reform. Although many aspects of the healthcare system are up for discussion, one topic being ignored is tort reform.

President Obama, in his address to the American Medical Association, stated that tort reform is off the table with respect to healthcare reform discussions. This is a mistake because medical liability affects both access to care and cost of care. In other words, it affects the entire nation.

Putting doctors on the defensive
The flaws of the medical liability system have been apparent for decades. In 2002, the Department of Health and Human Services declared that “the litigation system is threatening health care quality for all Americans as well as raising the cost of health care for all Americans.” It estimated that between $76 billion and $126 billion is spent each year on medical liability litigation. A year later, the National Association of Insurance Commissioners reported that malpractice insurance premiums had increased by 920 percent during the past three decades. This, in turn, has limited access to care for patients as physicians avoided or limited performing high-risk procedures and taking emergency department call.

The increase in medical liability insurance premiums has also raised overall costs of health care by prompting doctors to engage in defensive medicine. Defensive medicine, defined as “a deviation from sound medical practice that is induced primarily by a threat of liabilities,” is now one of the greatest sources of unnecessary healthcare costs.

In 2005, the Harvard School of Public Health joined with Columbia Law School to conduct a defensive-medicine survey among physicians practicing in Pennsylvania. Of more than 800 physicians in six specialties who responded, approximately 93 per­cent admitted practicing defensive medicine.

Orthopaedics, in particular, had a high number of affirmative responses: Nearly 57 percent of orthopaedic surgeons said they avoided caring for high-risk patients, compared to 39 percent of physicians in general. Likewise, 42 percent of orthopaedic surgeons reported avoiding certain procedures and interventions due to the risk involved, compared to 33 percent of all physicians.

The cost of defensive medicine
Defensive medicine has a very real and quantifiable cost to the U.S. healthcare system. A study by Stanford economists Daniel P. Kessler and Mark B. McClellan compared healthcare costs in 28 states with tort reform to healthcare costs in states without tort reform. The effects of medical liability reforms were analyzed using data on Medicare beneficiaries who were treated for serious heart disease in 1984, 1987, and 1990. They found that liability reforms reduced defensive medicine practices, leading to a 5.3 percent reduction in medical expenditures for acute myocardial infarction patients, and a 9.0 percent reduction in costs for treating for ischemia patients. Significantly, they found no effect on quality: Mortality and complication rates were the same. The difference was in costs; states without tort reform paid an additional $500,000 per elderly patient each year.

Since the study’s publication, the results have often been applied to current healthcare expenditures to approximate the cost of defensive medicine across the nation. If these statistics are applied to the nation’s $1.4 trillion annual health care expenditure, healthcare costs could have been reduced by $124 billion overall, and government healthcare expenses by $50 billion per year. This would be a savings of $174 billion per year. Adding the cost of defending malpractice cases, paying compensation, and covering additional administrative costs (a total of $29.4 billion), means the average American family pays an additional $1,700 to $2,000 per year for health care just to cover the costs of defensive medicine. With the nation’s healthcare costs expected to reach $4.3 trillion by 2017, the cost of defensive medicine to the average American could triple in the next 10 years.

More recent studies, including one conducted in 2006 by Price Waterhouse Coopers for America’s Health Insurance Plans, believe the costs associated with defensive medicine are much higher than estimated. For example, costs associated with medical liability are estimated to account for between 7 percent and 11 percent of health insurance premium dollars. Since the 1996 Stanford study, one of the fastest rising costs in medicine has been medical imaging. Approximately $100 billion dollars per year is spent on imaging, and radiologists estimate that $30 billion per year is unnecessary imaging. In the absence of tort reform, however, a doctor serving in the emergency department may order a computed tomography scan of the head for patient with a headache, “just in case.”

Efficacy of tort reform
Tort reform is not just a theoretical idea. It is has been studied for decades, and is proven effective in reducing costs, increasing access to care, and improving the quality of medical care.

Take, for example, California. Since the passing of the Medical Injury Compensation Reform Act (MICRA) of 1975, which imposed a $250,000 cap on noneconomic damages, premium increases for medical liability coverage have been 75 percent lower than the rest of the nation. Furthermore, plaintiffs receive their awards in one-third the time, and a 2004 study by the RAND Corporation found that MICRA redistributes money from the trial lawyers to the plaintiffs themselves.

Texas provides another case study for the efficacy of tort reform. The passage of Proposition 12, which places a limit on jury awards for medical liability cases, reduced the number of claims by 50 percent and more than 3,000 physicians returned to the state. Plus, there was no impact on the quality of health care delivered, the incidence of adverse effects remained the same.

How to help
To help bring tort reform to the forefront of the healthcare debate, consider taking one or more of the following steps.

Call or write your congressional representatives. Let them know you believe tort reform needs to be part of healthcare reform. Every senator and representative has a Web site with a “contact” link, making it easy for you to express your concerns online. If you don’t know who your congressional representatives are, visit the AAOS office of government relations Web site and enter your zip code in the section “Write to Congress.”

Respond to the call to action issued by AAOS President Joseph D. Zuckerman, MD, and participate in Project 535. For more information, visit the AAOS office of government relations Web site, click on “Advocacy Now,” and read the Aug. 10, 2009, AAOS Call to Action.

Support the Orthopaedic Political Action Committee (PAC). To effectively advocate for the interests of our patients and our profession, orthopaedic surgeons need to have a voice in Washington, D.C. The Orthopaedic PAC is one way to ensure that issues of the orthopaedic community are considered in legislation. For more on the Orthopaedic PAC, see “Healthcare reform and the Orthopaedic PAC” by Stuart L. Weinstein, MD, on page 00, or visit www.aaos.org/pac

Few doubt that the medical liability system is flawed. Clearly, tort reform would help increase access to care and likely result in hundreds of billions of dollars in defensive-medicine savings. What is not clear is whether we, as physicians, will become involved in bringing tort reform to the forefront of the healthcare debate.

David H. Sohn, JD, MD, is an AAOS Washington Health Policy Fellow. Javad Parvizi, MD, FRCS, and Charles S. Day, MD, MBA, are both members of the 2009-2010 AAOS Leadership Fellows Program. The authors would like to acknowledge Srinidhi Reddy for her contributions to this article.

Did you know?

  • Federal tort reform could save the nation an estimated $174 billion per year in defensive medicine.
  • Tort reform has been shown to result in speedier payments to the actual plaintiff, redistributing money from lawyers to patients.
  • The Department of Health and Human Services estimates that between $76 billion and $126 billion is spent each year on litigation costs alone in medical malpractice.