Economic Study Shows Minimal Impact of Malpractice Suits On Health Costs

April 5, 2011

According to a recent New York Times article divulging the results of an economic study on medical malpractice, our current system is flawed and leads to wasteful spending in the wrong areas. The article asserts that our present system pits conservatives and doctors blaming frivolous lawsuits as the main reason why American health care is so expensive against liberals who see malpractice reform as a way to keep the rich doctors and insurers wealthy. Economists have devoted a lot of time to studying medical malpractice and its impact upon our nation and come up with the following conclusions:

The studies by these economists have concluded that the direct costs of malpractice lawsuits, jury awards, settlements, and awards stemming from mediation are such a minute part of health spending that they are inconsequential and have very little bearing on healthcare costs. Although the economists did agree that the fear of lawsuits among doctors does seem to lead to a noticeable amount of wasteful treatment, this only amounts to around 3% of overall medical spending.

The findings of these studies also indicate that our current system appears to treat actual malpractice too lightly. While a trial by a Chicago Medical Malpractice Lawyer might get sensationalized, these trials and million dollar settlements are the exception to standard practice. It is much more commonplace for medical errors to never lead to any legal action. After reviewing thousands of patient records, medical researchers have estimated that only 2 to 3 percent of cases of medical negligence lead to a malpractice claim.

According to research submitted to these studies through the School of Public Health at Harvard, medical errors happen more frequently here in our country than in other rich countries. While the U.S. has a substantially increased occurrence of malpractice, only a small percentage of victims receive monetary compensation. And for those who do, the awards vary from the millions of dollars to a few thousand dollars.

The article reminds us that the goal of malpractice reform should be to reduce medical malpractice. The findings of these economic and medical research studies will be used to fuel a number of medical malpractice reform discussions in the next few months given president Obama’ recent commitment to initiating medical malpractice reform pilot projects.