Costs of Medical Liability

Books and gavelBetween 1993 and 2010, the average costs of medical liability rose 11% per year, to reach $55 billion or 2.4% of America’s total health care expense.   Less than half the pay-out was to patients.  Doctors’ defense attorneys received 19% and plaintiff’s’ attorneys 35 to 40% of pay-outs.  Meanwhile, unnecessary defensive tests were estimated to add 1% to the costs of doctors’ practices and 2% to the cost of hospitals.  These estimates by Mallo et al from Harvard’s School of Public Health remain the most comprehensive available.  Since 2010, there have been slight declines in malpractice insurance premiums as more doctors leave private practices to be employed by hospitals, but 20% of claims exceed a million dollars. Many internists pay insurance premiums over $5,000, some general surgeons over $100,000, and obstetricians over $200,000.

Some doctors attribute the explosion of costly claims to lawyers who advertise for injured clients.  Larger factors, however, are probably the simultaneous growths in prescriptions of psychotropic drugs and in novel and complex treatments for back pain, prostate and breast tumors. Added to their risks has been America’s obesity epidemic.  We hope our proposed healthcare model will reverse these trends in the following ways.

  • First is our Basic Plan’s reliance on primary care providers to screen patients referred to specialist and hospitals. They will be more likely to identify and minimize risks. They will not be incentivized by fees-for services.
  • Second is our Basic Plan’s payments from HHS for medical and surgical care necessary for recovery from an injury suffered as a result of medical accident or negligence.  To the degree that claims for “pain and suffering” are now made as percentages of recovery costs, these should also be reduced.
  • Third is our plan’s adoption of universal, interoperable electronic records, and their use in quality control, allowing primary care providers to identify and HHS to defund “quality outliers” – providers whose charges exceed their value and safety. Complete and reliable records also support just verdicts in malpractice litigation.

These measures will leave plaintiffs’ attorneys with the very important responsibilities of seeking just compensation for lost wages and prolonged disabilities.   Meanwhile, doctors should be reassured to know that in most cases, juries decide in their favor.

Ultimately the goals of a just healthcare plan might include having the cost of liability born by those who are responsible for adverse outcomes of care, such as advertisers of novel treatments.  In any case, there are ways our plan can reduce both the incidence of medical injuries and their cost to the public at large.