Two papers co-authored by experts in the regulation and finance of healthcare found that tort reform has little impact on controlling costs. Finding a solution to skyrocketing medical costs has been on everyone's mind since the 1990s. Every election cycle a new politician has the solution. Proposals range from a public option to dismantling Medicare.
A common scapegoat for skyrocketing medical costs are plaintiffs' attorneys and their clients, people injured by negligent doctors. Most people never pursue medical malpractice claims and those that do, hopefully, only have to do it once. So it is easy curb their rights.
The Opposing Side
Advocates of tort reform believe that capping certain types of damages is the "silver bullet" to curb the rise in medical malpractice costs. At first blush their position makes logical sense, reduce the amount of money that plaintiffs can recover will bring down insurance costs. As insurance costs go down, so do doctors' malpractice premiums.
It is argued that a lot of doctors practice "defensive medicine." Defensive medicine is the ordering of additional or redundant tests to confirm results. The purpose is to protect a doctor should a malpractice suit be filed. It is believed that as premiums go down, doctors will practice less defensive medicine. Less defensive medicine will bring down medical costs.
Another persistent problem for rural communities is access to adequate medical care. Doctors concentrate in urban and suburban areas and there is little incentive for them to go to rural communities. These communities have smaller hospitals with less advanced medical technology and therefore higher malpractice premiums. Proponents of tort reform believe that lower premiums for doctors will attract doctors to these rural areas and more doctors will drive down the cost of healthcare.
Unfortunately, the numbers do not necessarily support these positions.
Costs Remain High
These papers found that, at best, caps on damages might slightly reduce medical costs. Tort reform is too small of a solution for a problem as big as healthcare costs. According to Dr. Hyman, one of the co-authors, medical malpractice liability costs are "pretty modest" relative to total healthcare spending. He goes on to say that "tort reform may be a good idea or a bad idea, but ultimate it is a very small idea. It's not going to have as big of an impact as many proponents claimed it would."
The authors studied the third wave of malpractice reforms, which covered nine states, including Illinois, that enacted reforms between 2002 and 2005. The authors compared healthcare spending in those states before and after reform against states that enacted earlier reforms and found that tort reform coincided with a slight uptick in spending on physician services and no effect on hospital spending.
At best there is little or no change to medical costs and at worst it results in a slight increase in spending.
Do States Become Doctor Magnets?
Another common argument is that lower medical malpractice premiums will attract more doctors. The papers acknowledge that malpractice premiums may factor into a doctor's decisions on where to do their residency or set-up a practice but they found that it is far from decisive. Doctors may consider insurance premiums in deciding where to move but it is merely one of many factors including professional opportunities, familial obligations and other considerations.
There is simply no way to know how doctors may use this information. It might cause them to defer retirement, change specialties, work in a hospital or join a practice group. It could have little or no impact at all. Consider that most people do not decide where to live based upon auto insurance rates. Each doctor's situation is unique and their situations inform where they decide to move.
The authors did note a slight increase in the number of plastic surgeons but recorded no change in high-risk specialties or overall number of doctors. Moreover, it did not result in more doctors moving to rural areas - a persistent problem for many smaller communities. The economics of attracting and retaining doctors is more complex than simply reducing insurance premiums.
The authors argue that policymakers have other tools at their disposal to encourage doctors to move to their states including increasing Medicaid payouts, benefit incentives and support to pay off their medical school loans.
Tort reform might or might not be a good idea however these papers make clear that it is too small to effect any real change. Tort reform may in some small way help states attract more doctors but it isn't a silver bullet. State legislatures should not stop and rest on their laurels after they pass tort reform. Their efforts are better suited looking for real solutions.