Since malpractice reform is now back in the debate, how much could it do to solve our health cost problem?
• What Does Malpractice Cost? This is the big one. What does it add up to? The answer, which you wouldn't guess from Bush's policy papers or Clinton's speeches, is not very much. Legal costs are $27,000 per claim, settlements and judgments are $4.4 billion, and insurance is $700 million. The total cost of malpractice is thus 6.5 billion --.46% of health care costs, or less than one half of one percent. They're just not a significant factor in rising health prices, and those who say different are lying.
• Defensive Medicine? We're not sure it exists, and in any case it's not measurable. The Congressional Budget Office did a study and concluded that the savings from less defensive medicine post-tort reform, if there were any, would be very small. [More]
This not to say malpractice reform should not be pursued - just it's really small potatoes economically.
In fact, the way the system is structured almost insures excessive costs.
If liability concerns aren’t a major driver of overtreatment, then what is? Experts believe that the current reimbursement structure does more to shape practice patterns than fear of liability. “The current health system reimburses doctors, hospitals, and other health care providers based on the number of visits and procedures that are done. As a result, health care providers’ revenues and profits increase when they deliver more services and the cost of health care goes up,” Ellen-Marie Whelan, a Senior Policy Analyst at the Center for American Progress, wrote in a recent report.
Indeed, as Dr. George Lundberg — the former editor of the Journal of the American Medical Association — concludes, “at least 30% of the $2.5 trillion expended annually for American health care is unnecessary. Eliminating that waste could save $750 billion annually with no harm to patient outcomes.” [More]
The solutions for this problem are actually straightforward, I think: introduce free market supply and demand via greatly reduced insurance coverages, so consumers have to pay dearly for nearly every visit or procedure. Fees would drop and we'd all be better health care consumers.
And I'd like a pony too.
Even if all the current initiatives were to stall, we'd still be looking at runaway deficits that Congress refuses to address. Quick - name three 2011 budget cuts greater than $100B being pushed by Republicans to reduce the deficit (and the "reducing waste and fraud" smokescreen can only be used once). Perversely, we have discovered that the only thing worse than "tax and spend" is "cut taxes and spend". In fact, even just "spend" is a better choice than the latter.
Meanwhile, the range of The Possible has been reduced to alternatives that postpone costs and bring forward benefits, but because so many feel the system unfair, and postponing costs is now standard federal legislative procedure, the choices are could be seen as "Do you want any upside with that or just pain alone?"
Small wonder we're supersizing it.