A vigorous political blog, not for the fainthearted.
Thursday, June 18, 2009
Why he was booed-IBD almost always gets it right, and did so again this time
Health Care: President Obama talked a lot about cutting medical costs during his 7,300-word speech to doctors Monday. But he rejected the only item he brought up that would actually cut medical costs.
Though he acknowledged that part of the high cost of health care is due to defensive medicine — doctors ordering more tests and treatments than necessary in an effort to avoid being sued — he told the American Medical Association that he is "not advocating caps on malpractice awards."
"I personally believe (they) can be unfair to people who've been wrongfully harmed," he said.
Obama, who took some boos from a few American Medical Association members who don't agree with him, is free to hold that opinion. But the facts show generous awards that juries hand out to plaintiffs in medical malpractice lawsuits have raised costs.
• In 2004, Towers Perrin Tillinghast looked at the trial lawyer industry and found that "At nearly $27 billion in 2003, medical malpractice costs translated to $91 per person.
"This compares to $5 per person in 1975 (not adjusted for inflation). This significant escalation in medical malpractice costs has contributed to the increase in health care costs in the U.S. over the past 30 years."
• The Department of Health and Human Services said in its 2002 report "Confronting the New Health Care Crisis": "If reasonable limits were placed on noneconomic damages to reduce defensive medicine, it would reduce the amount of taxpayers' money to the federal government by $25.3 billion to $44.3 billion per year."
• The increase in medical malpractice lawsuits and the associated costs that keep going up have forced insurance companies to raise premiums for malpractice coverage. Doctors, in turn, pass the added costs on to patients.
"The litigation and malpractice insurance problem raids the wallet of every American," the Department of Health and Human Services said in the same report.
"Doctors alone spent $6.3 billion last year to obtain coverage. Hospitals and nursing homes spent additional billions of dollars."
• HHS has further said that reasonable limits placed on noneconomic damages in malpractice cases would save $60 billion to $108 billion a year.
"These savings would lower the cost of health insurance and permit an additional 2.4 million to 4.3 million Americans to obtain insurance," the department said.
Nearly 10% of the cost of health care services, figures PricewaterhouseCoopers, is attributable to medical malpractice lawsuits. Roughly 2% is caused by direct costs of the lawsuits while an additional 5% to 9% is due to expenses run up by defensive medicine.
PricewaterhouseCoopers also found that half of health care costs are due to wasteful spending and said that defensive medicine is the biggest producer of waste.
It would make sense to anyone who wants to bring down health care costs that caps on medical malpractice awards should be on the table — unless that person was beholden to the trial bar that is filled with members who make fortunes suing doctors.
Getting a handle on medical malpractice isn't the only way to keep down health care costs. Making patients more prudent consumers of medicine so that they will self-ration would generate the greatest savings. When a third party — insurance provider or government — makes the payments, patients will invariably inflate demand, which drives up costs.
We have long favored health savings accounts as a means to hold down what has become virtually unfettered demand created by the third-party payer system.
These are tax-exempt accounts used for routine health care needs that are under the sole control of the account holder. HSA owners have a strong financial incentive to seek care only when necessary because the unused portions of the accounts roll over each year.
Though malpractice award caps won't be as effective as HSAs in bringing down costs, they can still help squeeze out savings.
To dismiss them while spending more than 7,000 words talking about a host of plans that all will raise costs is irresponsible.
There is SO MUCH TO DO with respect to health care and yes - tort reform is one of the items. He said that he was not for capping malpractice awards per se. Neither am I. However - I am for changes that would potentially cap punitive awards and materially change the standard of proof. Lawsuits don't just cost a great deal to the system, they come a great emotional cost to the participants. I would elevate the plaintiff's requirement to "clear and convincing" evidence from a mere preponderence. I also support loser pays provided that it does not effectively shut the door to justice for all but the affluent.
BTW - Obama was received warmly by the doctors. The "boos" were not at all ugly.
2 comments:
Though he acknowledged that part of the high cost of health care is due to defensive medicine — doctors ordering more tests and treatments than necessary in an effort to avoid being sued — he told the American Medical Association that he is "not advocating caps on malpractice awards."
"I personally believe (they) can be unfair to people who've been wrongfully harmed," he said.
Obama, who took some boos from a few American Medical Association members who don't agree with him, is free to hold that opinion. But the facts show generous awards that juries hand out to plaintiffs in medical malpractice lawsuits have raised costs.
• In 2004, Towers Perrin Tillinghast looked at the trial lawyer industry and found that "At nearly $27 billion in 2003, medical malpractice costs translated to $91 per person.
"This compares to $5 per person in 1975 (not adjusted for inflation). This significant escalation in medical malpractice costs has contributed to the increase in health care costs in the U.S. over the past 30 years."
• The Department of Health and Human Services said in its 2002 report "Confronting the New Health Care Crisis": "If reasonable limits were placed on noneconomic damages to reduce defensive medicine, it would reduce the amount of taxpayers' money to the federal government by $25.3 billion to $44.3 billion per year."
• The increase in medical malpractice lawsuits and the associated costs that keep going up have forced insurance companies to raise premiums for malpractice coverage. Doctors, in turn, pass the added costs on to patients.
"The litigation and malpractice insurance problem raids the wallet of every American," the Department of Health and Human Services said in the same report.
"Doctors alone spent $6.3 billion last year to obtain coverage. Hospitals and nursing homes spent additional billions of dollars."
• HHS has further said that reasonable limits placed on noneconomic damages in malpractice cases would save $60 billion to $108 billion a year.
"These savings would lower the cost of health insurance and permit an additional 2.4 million to 4.3 million Americans to obtain insurance," the department said.
Nearly 10% of the cost of health care services, figures PricewaterhouseCoopers, is attributable to medical malpractice lawsuits. Roughly 2% is caused by direct costs of the lawsuits while an additional 5% to 9% is due to expenses run up by defensive medicine.
PricewaterhouseCoopers also found that half of health care costs are due to wasteful spending and said that defensive medicine is the biggest producer of waste.
It would make sense to anyone who wants to bring down health care costs that caps on medical malpractice awards should be on the table — unless that person was beholden to the trial bar that is filled with members who make fortunes suing doctors.
Getting a handle on medical malpractice isn't the only way to keep down health care costs. Making patients more prudent consumers of medicine so that they will self-ration would generate the greatest savings. When a third party — insurance provider or government — makes the payments, patients will invariably inflate demand, which drives up costs.
We have long favored health savings accounts as a means to hold down what has become virtually unfettered demand created by the third-party payer system.
These are tax-exempt accounts used for routine health care needs that are under the sole control of the account holder. HSA owners have a strong financial incentive to seek care only when necessary because the unused portions of the accounts roll over each year.
Though malpractice award caps won't be as effective as HSAs in bringing down costs, they can still help squeeze out savings.
To dismiss them while spending more than 7,000 words talking about a host of plans that all will raise costs is irresponsible.
There is SO MUCH TO DO with respect to health care and yes - tort reform is one of the items. He said that he was not for capping malpractice awards per se. Neither am I. However - I am for changes that would potentially cap punitive awards and materially change the standard of proof. Lawsuits don't just cost a great deal to the system, they come a great emotional cost to the participants. I would elevate the plaintiff's requirement to "clear and convincing" evidence from a mere preponderence. I also support loser pays provided that it does not effectively shut the door to justice for all but the affluent.
BTW - Obama was received warmly by the doctors. The "boos" were not at all ugly.
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