The Lie of Tort Reform

The “Health Care Summit” reminded me that there are some disturbing rumors that President Obama is open to incorporating GOP “ideas” on “Tort Reform”. This would be a tremendous mistake for several reasons.

First, Tort Reform has nothing to do with health care costs. It is solely a give away to the insurance industry. In States that have passed caps and other types of “Tort Reform”, the costs of delivering medical care, the costs of private medical insurance and the costs of medical malpractice insurance is the same, or more, as those States which have not passed Tort Reform. Study after study in the past 2 decades have consistently shown that medical malpractice lawsuits contribute less than 1/10 of 1% (.01) of health care costs. Some people claim that the hidden costs of lawsuits include the practice of “defensive medicine”, but again, the data proves otherwise. Most medical tests deemed to be unnecessary are ordered by doctors and hospitals seeking to up their fees and cover costs of purchasing new (and often unnecessary or duplicative) equipment. A hospital decides to order a new MRI machine and hire staff [even though a competitor down the street already has one], and all of a sudden the number of requests for MRIs increases.

The number of medical malpractice lawsuits has steadily declined in the past 25 years. The number of cases won by plaintiffs has decreased, and the average amount of money verdicts has decreased during the same time period. So why has the cost of medical insurance premiums and medical malpractice insurance increased exponentially? The only economic factor shown to correlate with increases in the costs of insurance premiums is the stock market. In other words, insurance companies raise premiums depending on how their investments in the stock market fare. Then, of course, there are the 28% administrative costs, including lobbyists to make sure that States don’t audit their books.

Not one insurance company, in any state, has ever opened its books to correlate the premiums charged with the actual cost of underwriting. The health care crisis is in large measure due to the abuses of private insurance companies. The solution to the crisis is not to take away the legal rights of Americans to have their day in court, and protect corporations, which is what Tort Reform is. Whenever I ask people, even conservatives, if they think the government should be able to change any verdict from any jury without hearing or reviewing a single piece of evidence, they say “absolutely not”. That is exactly what happens with damage caps (tort reform).

Even though it is widely recognized that the abuses private health insurance corporations have created the heath care crisis, the President still refuses to consider a single payer system. A single payer system would immediately reduce administrative costs, which is the single greatest contributor to escalating costs. But another more important effect of a single payer system would be to remove the corrupting influence of insurance industry money on politics. If you happen to have seen the health summit on television, imagine a dollar sum above the heads of each and every one of those Congressmen talking, representing how much money they took from the insurance industry to get elected… Max Baucus ($35 million), Joe Lieberman ($12 million), etc.

Tort reform will change nothing regarding the costs of health care. It is another give away, taking away all our rights. What we really need is campaign finance reform. That would solve more than just the Health Care Crisis.