Kim & Kendall: Could Tort Reform Help Rescue Health Care Legislation?

Posted March 1, 2010 at 4:43pm

As Democrats prepare to go another round on health care, they should rethink one of their traditional positions — opposition to medical malpractice reform — and offer a bold proposal. Such an offer would be smart policy and politics, helping to bend the cost curve and calling the Republicans’ bluff on their willingness to back a significant, bipartisan idea.

[IMGCAP(1)]On the policy, “defensive medicine” now consumes 4 percent to 9 percent of the nation’s total health care spending. That translates to between roughly $92 billion and $207 billion annually that is wasted on unnecessary tests and procedures that doctors perform simply to avoid the threat of a lawsuit. Eliminating just half of this waste would be enough to cover all uninsured Americans.

Beyond the savings it would generate to expand coverage, medical malpractice reform would be progressive. It would ensure that more injured patients get the compensation they deserve, end the unpredictable and lottery-like nature of the current system, and establish standards that could improve the quality of care nationwide.

By contrast, there is little about the current medical malpractice system that works. Only 2 percent of people injured by medical errors file a claim for compensation. The few winners must wait three to five years to see the money. More than half of it is siphoned off to attorney fees and court costs.

Democrats, however, often raise one major objection: caps on awards to injured patients. But they need not, nor should they, support this conservative idea as studies show that caps do little to reduce defensive medicine in the states where they have been enacted, according to the Congressional Budget Office.

Instead, Democrats should propose a health court, which can serve as the backbone for fundamental malpractice reform. A health court is a specialized system of courts similar to the workers’ compensation system that would handle only medical malpractice cases. Injured patients would simply fill out a form to receive compensation for common injuries. Disputes would be quickly handled in an administrative court run by medical experts, who would ensure that the same standards of practice are applied to all similarly situated patients. They would be able to reach many more patients who are deserving of compensation. And like workers’ compensation, the rewards would be fair and predictable.

On the politics, Democratic support of malpractice reform reshuffles the deck. It is a real offer to Republicans and would separate those for whom bipartisanship was essentially a high-stakes game of chicken from those who really want to get something done. When faced with a “no” vote on a litmus-test issue, these Members of Congress could be forced to blink.

And it would be a clear signal by Democrats to the nation that they are willing to embrace a major Republican idea. Thanks in part to Republican efforts, “junk lawsuits” are an issue that most Americans are already familiar with, and polls show malpractice reform to be widely popular. Moreover, Democrats would show they are not beholden to any special interest group, including trial lawyers. In an anti-incumbent electoral environment, a willingness to buck orthodox concerns could be seen as a powerful plus.

Comprehensive health care reform is essential for the future of our economy, the stability of the middle class and the economic security of the working poor. Medical malpractice reform would make a good bill better, put Republican pledges of constructiveness to the test and signal to the public that good ideas from all sides of the spectrum are welcome. This may be what is needed to get the bill across the finish line.

Anne Kim is the economic program director at Third Way, a Washington, D.C.-based think tank, and David Kendall is senior fellow for health policy at Third Way.