At a time of mounting concerns about health care costs, America’s broken medical liability system stands as a major culprit – raising costs and hampering quality of care for millions. While many states have adopted successful reforms, sky-high medical liability costs remain a significant problem nationally.
In 2010, medical malpractice costs were approximately $29.8 billion. According to research by Towers Watson, medical malpractice costs have increased at an average annual rate of 9.7 percent since 1975 versus 7.5 percent for all other tort costs.
The costs of medical liability are exacerbated by the filing of meritless lawsuits. A study from the Harvard School of Public Health found that as many as 40 percent of medical malpractice lawsuits they reviewed were groundless, meaning there was no evidence that a medical error was committed or that the patient suffered any injury. These cases waste court resources and force defendants to expend unnecessary funds to defend themselves – thus increasing the costs of medical liability, and ultimately, healthcare costs generally. read more...
Further, healthcare costs continue to rise because of the practice of “defensive medicine.” In response to increasing medical liability risks, doctors are ordering unnecessary tests and procedures as a way to protective themselves from liability. A 2010 survey by Mount Sinai School of Medicine researchers found that 91 percent of physicians believe concerns over malpractice lawsuits result in “defensive medicine.”
And it is not just the cost of healthcare that is affected by medical liability costs – healthcare quality is also impacted. The availability of some higher-risk medical specialties, such as OB-Gyn physicians, is becoming scarce as a result of high insurance premiums resulting from lawsuits.
According to a 2009 analysis by the Congressional Budget Office, the healthcare savings from proposed medical liability reforms, such as caps on non-economic damages and other reforms, would lower healthcare costs by as much as two percent–or about $35 billion per year.
While Congress has tried to pass meaningful medical liability reform in recent years, many states have successfully lowered their medical costs and increased the availability of care by passing medical liability reforms.
California was a pioneer when in 1975 it passed the Medical Injury Compensation Reform Act (MICRA), which placed a $250,000 cap on non-economic damages in medical malpractice lawsuits and limits on attorney contingency fees. Since its passage, claims in California are settled in one-third less time than in states without caps on non-economic damages. The law has been so successful that plaintiffs’ lawyers are threatening to run a ballot initiative that would obliterate the caps.
Many states have passed reforms modeled after MICRA, perhaps most notably Texas. Facing an extreme shortage of physicians and medical facilities and soaring medical liability costs, Governor Rick Perry signed into law sweeping medical liability reforms in 2003 that placed a $250,000 limit on non-economic damages against doctors and healthcare providers and an overall cap of $500,000 against healthcare facilities. Since Texas passed the reforms, lawsuits against hospitals have decreased by more than two-thirds, and the state added more than 80 practicing obstetricians in one year.
About 30 states have enacted some type of law placing limits on medical malpractice awards:
Alabama, Michigan, Alaska, Minnesota, Colorado, Missouri, Delaware, Montana, Florida, Nebraska, Hawaii, New Hampshire, Idaho, New Mexico, Illinois, North Dakota, Indiana, Ohio, Kansas, Oklahoma, Louisiana, Oregon, Maryland, South Dakota, Utah, Massachusetts, Virginia, West Virginia, Washington