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Is tort reform really needed?

There has been a lot of media coverage of the tort reform issue. The term "tort reform" refers to laws that are passed by the states to limit or cap the damages that a plaintiff might receive in a medical malpractice lawsuit. Tort reform has become a hot issue for politicians and the phrase is bandied about as a way to demonstrate fiscal responsibility.

Will it really work that way? A recent whitepaper from the Center for Progressive Reform says that tort reform will not reduce medical costs in any significant way, because premiums for malpractice insurance and payments to injured patients accounts for only .3 percent of health costs each year. The whitepaper, titled "The Truth About Torts: Defensive Medicine and the Unsupported Case for Medical Malpractice 'Reform'," asserts that tort reform is a smokescreen is supported by insurance companies that will benefit significantly if tort reform is enacted.

Here are a few of the report's conclusions:

Advocates of tort reform say that the high cost of medical care is due to doctors practicing "defensive medicine", or ordering unneeded treatment and tests, to protect themselves against lawsuits. The paper's authors point to other reasons for ordering seemingly unnecessary tests: family pressure, the availability of technology and financial gain for physicians who have a financial interest in testing facilities. For example, many medical groups own MRI machines, giving them a reason to refer patients to their own facilities.

The authors of the paper say that even if tort reform efforts were successful at reducing malpractice premiums by 10 percent, medical costs would go down by only .1 percent.

Doctors and their insurers exaggerate the extent of the problem, according to the whitepaper. The vast majority of physicians make no malpractice payments. A very small percentage - 5.9 percent - is responsible for 57.8 percent of all payments. And, according to the Kaiser Family Foundation, the average number of claims against doctors went from 25 claims per 1,000 doctors in 1991 to 18.8 claims per 1,000 doctors in 2003.

The authors believe that instead of fighting for tort reform, which primarily benefits insurance companies, the focus should be on lowering the medical error rate. Medical mistakes cost many billions each year and result in nearly 100,000 deaths. And, say the authors, tort reform efforts in states like California and Texas have not resulted in any significant reduction in malpractice premiums. Only the insurance companies benefit.

Source: Healthcare Payer News, "Tort reform won't provide significant healthcare savings," by Chris Anderson, Mar. 8, 2012.

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