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Medical Malpractice Comprise Less Than 2% of Healthcare Costs

September 8, 2011

As the presidential race gets into full swing, we are once again hearing complaints by some politicians that medical malpractice costs are behind our soaring healthcare costs. And that before we can begin to reduce healthcare costs, we must enact serious medical malpractice tort reform like caps on damages. Unfortunately, study after study shows that medical malpractice costs have very little impact on healthcare costs--less than 2%. As a Chicago medical malpractice lawyer, I bristle every time I hear statements that our healthcare system is falling apart because of medical malpractice lawsuits. Not only is this assertion false, it diverts attention to an important problem that should be tackled with diligence and integrity.

In 2009, the non-partisan Congressional Budget Office (CBO) issued a report regarding the relationship between medical malpractice costs and healthcare costs. Similar to the conclusion reached during the Bush Administration, the 2009 CBO report concluded medical malpractice costs (ie., insurance premiums, court verdicts, and defensive medicine costs) account for "less than 2 percent" of overall healthcare spending. Moreover, if the major tort reform measures requested were implemented (including caps on damages), "it would reduce total national healthcare spending by about 0.5 percent." Yet, despite these independent government studies, many in Washington continue feed the public false information on tort reform.

More recently, Columbia University conducted a study on the main factor behind our healthcare costs in this country. Published in the journal Health Affairs, economists at Columbia found that high doctor fees, not medical malpractice costs, are the main reason why healthcare costs are higher in the U.S. than other countries. According to the study, "U.S. primary care physicians earn about one-third more than do their counterparts elsewhere" primarily "because a much larger share of their incomes is derived from private insurance." This is particularly true for orthopedic surgeons. "Among orthopedic surgeons, those who had the highest annual pretax incomes, net of expenses, were in the United States" averaging $442,450, the study said. The annual pretax earnings of orthopedic surgeons in other countries was less than $210,000.

My purpose of highlighting these and other studies is not to criticize doctors or the healthcare industry. Instead, it is to rebut the misinformation on medical malpractice cases that are routinely cited as fact. In reality, if we eliminated all medical malpractice lawsuits, regardless of the severity of injuries or the egregiousness of the doctor's conduct, it would barely make a dent in total healthcare spending. Yet, many politicians continue claim tort reform is the panacea to our healthcare ills. Healthcare reform is a serious topic that deserves serious attention. Baseless attacks and false accusations will get us nowhere.

Sources Used:

Congressional Budget Office, Report to United States Senate, October 9, 2009.
New York Times, Doctor Fees Major Factor In Health Costs, Study Says, September 7, 2011.
Consumer Reports, Would Medical Malpractice Reform Fix Our Health-Care System?, March 5, 2011.

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