Commentary

The Case against National Medical Malpractice Reform

Nobody wants medical tort reform more than me. As a surgeon in private practice for over 30 years, I feel the sting of exorbitant malpractice insurance premiums. I hear tales in the hospital doctors’ lounge of frivolous lawsuits, of suits brought by ungrateful and misinformed patients, of doctors torn between feelings of compassion and fear when they interact with many of their patients. In most states, the cost of bringing a lawsuit is negligible, while the defense costs, including those to the psyche, are enormous.’

However, I wince every time I hear politicians and pundits claim that tort reform is an essential ingredient to “free-market health care reform”—that it is a “major driver” of rising health care costs. I know that if they waved a magic wand and completely eliminated the threat of medical malpractice lawsuits tomorrow, nothing much would change in the way in which my colleagues and I practice medicine. True, at the margin, there may be some test here or there that we may not obtain “to cover our asses” when we know in advance it is probably unnecessary. But those instances are few and far between. Generations of practicing under the threat of malpractice suits have changed the culture of medical practice. Ordering expensive, redundant, and possibly unneeded tests is now baked into the cake. Doctors are trained through medical school and postgraduate residency programs to lean heavily on testing—from blood tests to high-tech imaging—in their diagnosis and treatment.

Our third-party payment system has served to nurture this medical culture. Doctors are rarely concerned about the cost, let alone the cost/benefit ratio, of various tests, because they never get asked those kinds of questions by the patients. And why would they? The doctor and the patient are spending the third party’s money. The third parties often come up with sets of arcane requirements for authorization for some of these tests in an effort to control costs, but as with most bureaucratic roadblocks, it doesn’t take long to find workarounds, and discover the proper response needed to trigger an authorization.

Medical tort reform is overrated. And it’s probably unconstitutional.

While my own experiences as a clinician lead me to conclude that medical tort reform is not the panacea the politicians and pundits profess it to be, there is also empirical evidence to support my position.

In a study on the subject by Ronen Avraham and others for the National Bureau of Economic Research, the important point is made that the threat of liability is a two-edged sword. While reducing the threat might theoretically reduce the ordering of unnecessary tests and procedures, it might also lead to costly medical errors and incentivize some unscrupulous practitioners to recommend profitable but unnecessarily risky procedures. The study’s authors focused on the impact of tort reform that involved caps on punitive damages, on awards for “pain and suffering,” and on limiting “joint and several liability,” i.e., the ability to go after the entity with “deep pockets” regardless of its degree of involvement. They followed 10 million non-elderly people in employer-sponsored health plans from 1998-2006. They found that such tort reforms reduce premiums of self-insured companies by 1-2 percent, but had no impact on premiums of companies that were not self-insured, meaning those that used commercial insurance—ether a PPO or an HMO—to cover their employees.

A 2014 study reported in JAMA, the journal of the American Medical Association, by Michael Rothberg and others concluded, “although a large portion of hospital orders had some defensive component, our study found that few orders were completely defensive and that physicians’ attitudes about defensive medicine did not correlate with cost. Our findings suggest that only a small portion of medical costs might be reduced by tort reform.”

In January 2015 the University of Illinois’ Professor of Law and Medicine David Hyman released two studies on the matter. One found, again, no significant impact of tort reform on reducing health care costs, and that reforms using caps might actually increase health care spending. The other study investigated assertions that states that institute tort reform would become “magnets” to physicians willing to relocate. Outside of a slight increase in the population of plastic surgeons, it found this was not the case. The study was limited to states with reforms involving caps.

Texas, in 2003, enacted a much more aggressive version of tort reform than many other states, and some reports suggest it works better. But the data on Texas are mixed. A 2013 report in the Journal of Gastrointestinal Surgery suggested Texas’ reform increased its population of doctors. On the other hand, a survey of studies in a report by a Dallas medical business news website suggests the reported benefits of Texas’ tort reforms are overblown.

And the Cato Institute, in an October 2014 prospective study by Myungho Paik, Bernard Black, and David A. Hyman reported on Medicare patients who were followed from 2002-2005 in 9 states that had adopted damage caps. The study found that Medicare Part A spending did not significantly change for the enrollees, but Part B spending actually increased by 4-5 percent. It also found that decreases in malpractice paid claims rates corresponded to increases in Part A and Part B spending. The authors state, “we provide evidence that physicians ‘do more’ for Medicare patients after adoption of damage caps, but we do not study what physicians do differently, or why.”

Suffice it to say, at a minimum, that many politicians and pundits on the right have overstated the effects of medical malpractice reform on overall health care spending.

But there’s another problem with national malpractice reform, and it’s a constitutional one. For the most part, medical malpractice tort law is a state-based issue. Except in the rare instances in which medicine is practiced interstate, almost all acts of medical liability occur intrastate. It usurps state sovereignty when the federal government imposes its preferences upon a state’s civil tort law regime. Including medical malpractice reform in a comprehensive national health care reform scheme contradicts the principles of federalism.

Dean Clancy, a former White House senior official and noted commentator and columnist, has catalogued quotes from respected constitutional scholars on the matter of national malpractice reform. Here are a few examples.

George Mason University Law Professor Ilya Somin has said, “”Hopefully, at least some Republican conservatives will begin to see that you can’t advocate strict limits on federal power with one hand while trying to impose sweeping federal control over state tort law with the other.”

Georgetown University Law Professor Randy Barnett says, “Senate Republicans are claiming that Congress has power over the judiciary of the states because state courts are an activity that ‘affect[s] commerce.’ With friends like these, constitutional federalism does not need enemies. Can we coin a new pejorative, FINO: ‘Federalists in Name Only’?”

Former Virginia Attorney General Ken Cuccinelli, commenting on a section included in a 2011 Senate Republican jobs bill, said, “with Senate Bill 197—legislation that would have the federal government dictate how state judges are to try medical malpractice cases and cap what state courts may award—several Republican senators have reminded us that federal impositions on states that run contrary to the U.S. Constitution and to the spirit of federalism have never been the sole prerogative of just Democrats.”

So while singing paeans to national malpractice reform amount to another example of over-promising by advocates in Congress and their friends in the punditocracy, it also represents a departure from their professed fealty to the Constitution and to federalism.

This doctor is all for tort reform. But it should be done on the state level.

Republicans should drop malpractice reform from their health care reform checklist. It’s a distraction from the main goal of health care freedom and it is probably unconstitutional. It’s also overrated.

Jeffrey A. Singer practices general surgery in metropolitan Phoenix and is an adjunct scholar at the Cato Institute.