• It turns out medical malpractice “tort reform” doesn’t reduce federal health care spending all that much…if at all Friday, May 31, 2019

    CJ&DThe Center for Justice & Democracy has taken an in-depth look at a new report from the non-partisan Congressional Budget Office on the potential impact of federal medical malpractice legislation on federal health care spending, and it found the CBO has changed its tune considerably from its report on the same issue 10 years ago. The CJ&D called the earlier paper’s approach “extremely flawed and appropriately criticized.”

    As you read this, keep in mind that any legislation that limits damage awards for those who were injured by or lost loved ones to medical negligence (such as California’s MICRA) not only limits accountability for wrongdoers but disproportionately reduces compensation for those who were most seriously harmed. With that in mind, here are three key findings the CJ&D found in this the new report:

    1) The CBO’s earlier estimate of savings was wildly overstated.

    The CBO completely changed its methodology in the new report after finding no evidence that “tort reform” has any impact on Medicare spending. The new report has cut the amount of projected federal health care savings nearly in half, to just 0.5% of total federal health care spending. And the CJ&D believes the new estimate of savings is still too high, saying the CBO “devalued findings from recent robust studies, done with ‘comprehensive high-quality data’ and estimated with ‘reasonable precision,’ demonstrating that caps on damages may cause higher Medicare Part B spending.”

    Five of the six “tort reform” measures examined by the CBO, all included in a bill passed by the U.S. House in 2017, have, in the words of the CJ&D’s analysis of the report, “no evidence that [they would have] any impact on health care spending.” The one measure that the CBO considered in estimating savings is a cap on non-economic damages, as California has under MICRA. In the CBO’s own words, many of its assumptions are variously described as “fundamentally untestable,” “theoretically ambiguous” and “imprecisely estimated,” leading the CJ&D to say the CBO’s conclusions are “largely based on guesswork.”

    2) Caps on attorneys’ fees in medical malpractice cases actually cost the government money.

    One “tort reform” measure the CBO analyzed was a percentage cap on attorneys’ fees, the percentage increasing as the amount of the damages awarded increases (California has such a cap under MICRA). According to the CBO, “[b]ecause caps on attorneys’ fees would reduce attorneys’ taxable income, [government] revenues would be reduced under proposals that include that policy. Capping attorneys’ fees would not affect federal spending.”

    3) Damage caps do not reduce so-called “defensive medicine.”

    The CJ&D analysis says, “CBO accepts the finding of other recent studies showing that imaging and testing actually increase after a state enacts a cap.”

    One other point the CJ&D makes: the CBO “fails to consider how [damage] caps weaken the deterrent potential of the tort liability system, leading to new costs associated with increased patient harm….[T]here exists an extremely credible study, ignored by CBO, which shows…that patient harm increases when states cap damages.”

    There’s more in the CJ&D report, “The Top 15 Things We Learned From Our Deep Dive Into CBO’s New Medical Malpractice Working Paper,” and we urge you to read it. If you’re brave, tackle the CBO paper itself, although, as the CJ&D points out, “the paper’s difficult writing style and charts are clearly not written for laypeople tasked with developing actual policy, or at least those without PhDs in math and economics.”

    —  J.G. Preston

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