New CPR Paper Takes on Defensive Medicine Myths and the Unsupported Case for Medical Malpractice ‘Reform’

In 1975, Indiana lawmakers joined a small but growing group of state legislatures passing aggressive medical malpractice “reforms.”  Indiana’s law capped damages that victims of medical malpractice can recover at $500,000 and eliminated damages for pain-and-suffering altogether, Frank Cornelius, a lobbyist for the Insurance Institute of Indiana, played a role in helping pass this legislation.  Twenty years later, Cornelius suffered a tragic series of negligent medical errors that left him wheelchair-bound, dependent on a respirator to breathe, and requiring a morphine drip for continuous physical pain.  Facing medical expenses and lost wages of $5 million if he lived to retirement age, Cornelius experienced first-hand the effects of his lobbying for the insurance industry:  he was forced to settle his claims for the $500,000 limit.  In an op-ed in The New York Times several years later, Mr. Cornelius told his story, expressing regret and noting, sadly, if ironically, that the reforms he brought had failed to control health care spending in Indiana.

In pursuing their assault on the civil justice system, corporate lobbyists support legislation like that passed in Indiana by arguing the tort system leads to “defensive medicine.”  A new CPR White Paper, The Truth About Torts:  Defensive Medicine and the Unsupported Case for Medical Malpractice ‘Reform,’ refutes their claim that “defensive medicine” is a reason for increasing health care costs.  My CPR colleague, Tom McGarity and I, along with CPR analysts Nicholas Vidargas and James Goodwin, show how conservative and business interests press their claims about defensive medicine despite the fact that there is no reasonable evidence to support their arguments.

As health care spending in the United States has grown, corporate lobbyists have pressed their case that physicians react to their perceived litigation risk by practicing “defensive medicine,” making medical decisions to avoid potential litigation, instead of with their patients’ health and safety in mind.  Sure, doctors are mindful of the threat of litigation, and may change their behavior accordingly.  But, according to recent research, at best only about 2 percent of all health care costs may be attributable to “defensive medicine.”  The actual number, however, is likely to be less.  Even the analysts who estimate that defensive medicine is responsible for 2 percent of health care costs recognize the evidence supporting that number is weak. 

What the evidence shows is that a host of influences push individual physicians to provide medical care with diminishing marginal benefits.  However, proponents of the defensive medicine myth make no effort to untangle such motivations as the desire to maintain a good doctor-patient relationship, the influence of advertising on patient demands, family pressure, financial gain for the doctor, and the simple availability of technology.  

Moreover, reducing premiums, and, theoretically, the fear of litigation, barely makes a dent in health care spending.  Analysts estimate that tort reform may reduce health care costs by 0.132 percent.  Not even a penny on the dollar.  And it’s not clear that tort reform would even save this amount of money.  Recent research shows that physicians’ fears of litigation aren’t even responsive to changes in their malpractice premiums.  In a study in Health Affairs, researchers found that physicians in tort reform states maintained similar levels of malpractice litigation fear as physicians in states without caps.

Tort law provides a safety net for those injured by medical malpractice to recover compensation for their injuries while creating a powerful incentive for medical providers to avoid negligent behavior, a role state medical boards – which function as a private regulatory system for the profession – seem uninterested in performing.

Civil justice opponents would rather pretend that constraining the civil justice system equates to meaningful health care reform because their argument distracts us from doing the difficult things that must be done to effect real change, including avoiding the estimated 98,000 deaths caused by preventable medical errors every year and providing insurance to the 50 million or so Americans who lack it.  There is not, and has never been a malpractice lawsuit crisis.  Insurance companies raise premiums on malpractice insurance in response to economic cycles, not in response to malpractice litigation.  But when insurance companies raise their rates in order to offset reductions in investment income or recoup the cost of market competition, the right wing renews its push for civil justice restrictions.

People expect that the civil justice system will be there for them when they need it.  If proponents of tort reform succeed, they may be surprised, as Frank Cornelius was, that it doesn’t work the way they expected when their day in court arrives.