"Great Benefit is like a Giant Slot Machine that never pays off"

by reader Run

“Great Benefit is like a Giant Slot Machine that never pays off”. The RainMaker, John Grisham

Private Healthcare Insurance companies paid off for those from whom they can profit. The rest of us who are costly because of age, disorders, or illness are bound to find ourselves without private insurance and too young or high in income for government insurance. Private healthcare insurance is not insurance, it is speculation, a gamble upon your health and the returns from your premium. Those who have healthcare insurance are those insured by the government.

“This builds into another favorite Grisham premise — that the idea that the courts are jammed with nuisance lawsuits is backward. Average people haven’t a clue as to their rights because the law has become as removed and alien as another planet, Grisham suggests.” “Grisham Is Back In Court”

The push to reform medical malpractice laws focuses on lawsuits being the cause for higher insurance costs for doctors, driving doctors out of practice, and as a major contributor to overall healthcare cost. In the past, I have answered on the question of medical malpractice lawsuits and the impact on healthcare costs. Not having a degree in law, I can not answer for the legality of lawsuits; but, I can continue to point out the insignificance of medical malpractice lawsuit cost on the overall healthcare cost. I will add, it would make sense to modify medical malpractice law if people did not have to pay out $thousands to care for themselves or someone else who has suffered temporary or permanent debilitating injury as a result of a doctor, hospital, corporation, or medical practice’s negligence. If universal healthcare were in place, the need for a major component of malpractice law suits, awards for hospitalization or nursing care, could potentially be nullified. Today without such a plan in place, it is inconceivable to eliminate the only manner in which an individual can recoup expenses from a hospital, a corporation, or a doctor’s practice/business when nothing exists to take care of the victim.

In 2004 Bush claimed; “The health care system looks like a giant lottery. That is what it looks like these days with these lawsuits and somehow the trial lawyers are always holding the winning ticket.” Again in 2006 President Bush cited Medical Malpractice Lawsuits as the biggest issue driving doctors out of business; however, the numbers of physicians are rising at a ratio faster than the population and at the same time as profits for malpractice insurance companies. 15 malpractice insurers in Florida had profits increase by ~$800 million in 2005. While insurance premiums may be rising for doctors and profits are rising for insurance companies, the numbers of malpractice suits resulting in payment have been declining. From 2001 to 2005, the numbers of payments decreased from 16,588 to 14,033 and are reflected in payments/awards per 100,000 made on behalf of doctors going from 5.82 to 4.73. When adjusted for inflation, total malpractice payments over the 14 years have gone from $2.11 billion in 1991 to $2.14 billion in 2005 or an increase of ½ of 1%. “The Medical Tort Reform Debate” Public Citizen 2007

In the seventies, Tom Baker (Univ. of PA Prof. of Law and Health Sciences) recalled similar issues being discussed by his father around the dinner table accusing medical malpractice lawsuits of driving up the cost of healthcare, insurance premiums, and driving doctors out of business. In the mid 1970s, the California Hospital and Medical Associations sponsored a study on the “exploding” frequency of medical malpractice suits. The investigation found thousands of people injured by malpractice; but, few of the injured actually sued. The study was never brought to the forefront in California until the passage of restrictive malpractice lawsuit reforms in California. The study then emerged from the background it was placed in and published in an association report and failed to get the public acknowledgement it deserved.

Since the seventies, the topic of malpractice lawsuits surfaced again in the eighties, at the turn of the century, and again now. Other studies since the seventies California study have confirmed what was found then in California in the seventies: too much medical malpractice with little malpractice litigation; the actual costs of medical malpractice having little to do with the litigation; medical malpractice insurance premiums being cyclical and having little to do with litigation or runaway juries; and many undeserving malpractice suits being brought forth because people can not find out what happened. What can be counted on is continued pressure to draw the attention away from the ~100,000 cases of malpractice yearly and rising insurance premiums until such time as premiums decline for doctors. Little if nothing has been done to lower the incidence of malpractice by doctors, which are mostly mistakes. “The Medical Malpractice Myth,” Tom Baker.

August 2009, “Would Tort Reform Lower Healthcare Costs?” Tom Baker answers questions in the NYT Health Section. Tom Baker made the following observation on medical malpractice reform:

“Because it’s (tort reform) a red herring. It’s become a talking point for those who want to obstruct change. But [tort reform] doesn’t accomplish the goal of bringing down costs.”

It is claimed the vast number of malpractice lawsuits drive up healthcare costs at a rate of 10 – 15% per year. The reality with malpractice suits is an increase in the cost of healthcare of ~1.5% or ~ $31 billion (2007) against a $2 trillion healthcare economy. What is driving up the cost of healthcare and healthcare insurance are overhead and administrative costs, an aging population, chronic illness, a growing population of people with poor life style habits, fragmentation of the industry, technological advances, poor planning, and the wealth of the populace who have more disposable income.

Comments on how doctors are practicing increased defensive medicine because of potentially being sued are not as true as some would have us believe. What has been found are doctors practicing medicine consistent within the standards and practices of the region in which the doctors are located. A 1996 Florida study did find a potential 5-7% increase in costs as a result of Florida’s doctors practicing defense healthcare with regard to heart disease. After a few years, the same authors rechecked the percentages and found the potential cost increases dropped to 2.5 – 3.5% with this drop coming about after managed healthcare came into being.

As are the plaintiffs bringing medical malpractice lawsuits, lawsuits are an easy target to vilify. It gives most people and critics vision of $millions in “sugar plums” being unjustly awarded for little or no reason. Medical malpractice lawsuits are the poster child for the rising costs of healthcare and insurance even when they have little impact. In any case, the elimination of malpractice suits will do little to slow the rising cost of healthcare or insurance and as Prof Baker points out a “red herring used to obstruct change.” Many states already have caps on malpractice awards ranging from $250,000 to $500,000 for pain and suffering and these caps do not index for inflation. The visions of $millions being recouped do not exist for most plaintiffs.

In the period of 1991 – 2005 82% of malpractice rewards went to injuries such as death (~32%), significant permanent injury (~19%), major permanent injury (~19%), and quadriplegic, brain, and lifelong care (~13%). The average medical malpractice award in 1991 was ~$281,000 and grew to ~$486,000 in 2005. When adjusted for inflation, the average for 2005 decreases to ~$260,000 or a decrease of ~8% in the size of malpractice awards when compared to 1991. The false premise of being awarded $millions typically does not happen. ~2.4% of payments in 2005 were > $1 million and ½ of 1% were > $1 million over the 1991-2005 period. A botched nose job causing emotional injury was