WASHINGTON BUREAU — The Congressional Budget Office reported Friday that tort reform would save the federal government $54 billion over 10 years.
The CBO looked at the medical malpractice question in response to a request by Sen. Orrin Hatch, R-Utah, the highest ranking Republican member of the Senate Health, Education, Labor and Pensions Committeee.
The CBO estimates significant changes in tort reform policies could save $41 billion for the federal government from 2010 to 2019 and increase government revenue by $13.
“Because of mixed evidence about whether tort reform affects the utilization of health care services,” past analyses by the CBO have “focused on the impact of tort reform on premiums for malpractice insurance,” the CBO says.
But newer research suggests that lowering the cost of medical malpractice tends to reduce the use of health care services, the CBO says.
The CBO says the government could cap tort awards by limiting awards for noneconomic damages, such as pain and suffering, or by limiting the amount awarded for punitive damages, or the situations in which a plaintiff could receive awards for punitive damages.
“The two most common ways of imposing limits on liability are to shorten the statute of limitations on malpractice claims and to change the rules regarding joint-and-several liability,” the CBO says.
In practice, the principle of joint-and-several liability gives claimants a chance to collect from the defendant that appears to have the deepest pockets, regardless of how much responsibility that defendant had for the injury.
“Replacing joint-and-several liability with a ‘fair-share’ rule would limit each defendant’s financial liability to his or her percentage share of responsibility for the injury,” the CBO says.
Sen. Charles Grassley, R-Iowa, the highest ranking Republican member of the Senate Finance Committee, says the CBO analysis shows that tort reform obviously should be included in any health reform bill enacted by Congress.
“This analysis confirms that meaningful tort reform would significantly cut down on health care costs,” Grassley says. “Doctors often order tests just to protect themselves from lawsuits, not to treat patients. Doctors limit their services or even shut down their practices altogether because of skyrocketing malpractice costs…. The more federal health care programs spend on unnecessary tests, the less money is available for necessary patient care.”
The Council of Insurance Agents and Brokers, Washington, is welcoming the CBO’s tort reform savings estimate.
“Discouraging the practice of defensive medicine should play a more integral role in reform legislation,” CIAB spokesman Joel Kopperud says.
President Obama should have Health and Human Services Secretary Kathleen Sebelius start testing medical malpractice solutions, Kopperud says.
The Institute for Legal Reform, an arm of the U.S. Chamber of Commerce, Washington, is calling the CBO’s estimate of the effects of tort reform “momentous.”
“Neglecting to include medical liability reform benefits only the plaintiffs’ lawyers,” says Lisa Rickard, president of the institute. “Including it benefits every American participating in our health care system.”
The American Association for Justice, Washington, a group that represents plaintiffs’ lawyers, says the real point of the CBO analysis is the relatively small size of medical malpractice costs relative to the overall size of the U.S. health care system.
“Despite claims by tort reformers that the greatest cost of malpractice claims are borne by the public in the form of ‘defensive medicine,’ today’s analysis shows that at most, malpractice reform would provide savings of 0.3% in this area,” the AAJ says. “In total, tort reform would provide a paltry 0.5% savings, while putting patients at risk. Indeed the CBO itself raised concerns that limiting patients’ legal rights could further jeopardize patient safety.”