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Published 10/1/2011
Nikhil Mathews; A. Alex Jahangir, MD; Mallory Powell; William T. Obremskey, MD; Manish K. Sethi, MD

The HEALTH Act of 2011 and Texas

What states can teach the federal government about malpractice reform

The enactment of the Patient Protection and Affordable Care Act made 2010 a landmark year in the history of the U.S. healthcare system. But after midterm elections later that year left Republicans in charge of the House of Representatives, the 112th U.S. Congress is set to consider a different type of healthcare reform. The HEALTH Act of 2011 (HR 5) seeks to limit the amount of punitive and noneconomic damages that juries can award, shorten the statute of limitations, and restrict the recovery of attorneys’ fees in medical liability cases.

Before diving into another sweeping federal reform, however, Congress could learn some valuable lessons from state-level experiments with tort reform. Data from malpractice reforms introduced in Republican legislatures across the United States will eventually be used on the federal level to make the case for and against bills like the HEALTH Act of 2011.

The case in Texas
Texas has been a flashpoint for debate over malpractice reform. In 2003, then governor Rick Perry signed into law medical liability damage caps that resemble those contained in HR 5. The Texas law also capped noneconomic damage awards at $250,000.

Since then, the lower awards have led to lower medical liability premiums. Medical liability insurance rates in Texas declined by 25 percent between 2003 and 2008. That is an important boon for Texas physicians, but the effect of the reforms on insurance costs for the average Texan has been more muted.

According to data from the Agency for Healthcare Research and Quality, between 2003 and 2008, health insurance premiums in Texas rose at rates only slighty less than the national average. Individual premiums rose 114 percent (versus 120 percent nationally), while family premiums rose 144 percent (versus 148 percent nationally). Thus, the reforms have had only a modest effect in restraining surging healthcare costs.

Critics have used these statistics to argue that medical liability reform will never radically change the healthcare cost curve. But if cost savings don’t clearly make the case for medical liability reform, the Texas reforms do demonstrate several other important benefits. For example, the reforms have resulted in an influx of physicians seeking refuge from surging insurance costs; between 2003 and 2011, the number of doctors practicing in Texas grew by 25 percent.

With a national physician shortfall looming, every physician wooed to Texas is a physician lost to another state. But the movement of physicians to Texas triggered by tort reform on the state level illustrates one of the reasons that federal reform is desirable. By setting nationwide limits on damages, the HEALTH Act can end the zero-sum game of damage-capping efforts by states to lure physicians from other states.

Happy doctors
Texas’ ability to attract doctors with its reformed liability system also points to a simpler benefit of tort reform: Doctors are happier when practicing medicine in less litigious environments. Research indicates that physicians in high-liability environments report decreased satisfaction. Litigious environments tend to erode physician satisfaction by decreasing physician autonomy and income and by impeding the quality of the physican–patient relationship.

Physician happiness in itself is not the goal of health policy, but a system that keeps its physicians contented can reap many attendant benefits. Notably, physician satisfaction is associated with several measures of quality of care. For example, satisfied physicians are less likely than their unhappy peers to prescribe drugs that are deemed inappropriate by the medical consensus. More-satisfied physicians have also been found to be more open with their patients and more attuned to the psychosocial aspects of patients’ problems. Physician satisfaction is also correlated with patient satisfaction. Thus, if medical liability reform makes doctors happier and better at their jobs, all stakeholders in the healthcare system stand to gain from it.

Like so much in medicine, the value of medical liability reform cannot be captured on a balance sheet. Although limiting noneconomic damages in medical liability cases is one weapon for trimming costs in the nation’s healthcare system, it is not the primary solution to the health spending crisis.

Advocates of tort reform would do well to balance their promises of cost reduction with an emphasis on the cultural benefits that flow from a less litigious medical workplace. Passage of the HEALTH Act may not save the fiscal future of the United States, but it will likely improve the lives of patients and physicians and raise the quality of medical care.

Nikhil Mathews; A. Alex Jahangir, MD; Manish K. Sethi, MD; William T. Obremskey, MD; and Mallory Powell are associated with the Vanderbilt Orthopaedic Institute Center for Health Policy.


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