Anchorage Daily News
 

Our view: Oversold 'solution'
In Alaska, the tort reform some are demanding is already here



(09/29/09 19:00:05)

Some Alaska doctors and politicians such as U.S. Sen. Lisa Murkowski contend tort reform -- mainly capping damages allowed from medical malpractice suits -- is a must to bring down health care costs. Others, including Sen. Mark Begich, have said that tort reform is a minor factor in health care costs.

In Alaska, we've already got tort reform. A new law in 2005 capped non-economic damages, such as pain and suffering, at $250,000, unless the malpractice involves death or a 70 percent disability. Then the cap is $400,000.

Since 2005, medical malpractice insurance premiums have trended downward, says Andy Firth of Medical Insurance Exchange of California, the biggest malpractice insurer in the Alaska market.

But in Alaska, so far, tort reform has not helped drop health care costs for consumers.

HEALTH COSTS RISING

A state Department of Labor report last month showed health care costs in Anchorage are on a steady upward trajectory -- they quadrupled between 1982 and 2009.

Health care costs in Missouri, which also capped non-economic damages in 2005, have also continued rising, according to an Aug. 29 article in the Kansas City Star. The same is true of Texas, which enacted "even more stringent tort reforms," the article said.

Supporters of tort reform say it also helps reduce costly "defensive medicine." The notion is that doctors will quit ordering tests, procedures and consultations that are done just to protect themselves from malpractice claims, and not because they have medical benefit.

The Congressional Budget Office says there's not conclusive evidence that doctors are practicing so-called defensive medicine to an extent that would affect health care costs.

NO BIG SAVINGS

But the experience of these other states and a 2004 report from the Congressional Budget Office support the conclusion that national tort reform will not yield the kind of cost savings that America needs in the health reform package.

The Congressional Budget Office noted that malpractice costs amounted to less than 2 percent of overall health spending in one year studied, 2002. Even a 25 percent to 30 percent reduction in medical malpractice premiums would not significantly affect total health care costs, says the CBO report "Limiting Tort Liability for Medical Malpractice."

If we're looking to save big bucks, we should look elsewhere. We should put greater emphasis on preventing health problems, for example, and modernizing doctors' offices, including use of electronic records, to reduce medical expenses.

DETERRING MEDICAL ERRORS

The threat of medical malpractice lawsuits cuts down on health spending in one important way. It puts pressure on medical professionals to avoid common medical errors -- such as transmitting infections that could be avoided through hand-washing -- that drive up costs and even kill people. The Institute of Medicine has estimated that at least 44,000 and maybe as many as 98,000 people die each year from medical mistakes in hospitals.

Firth of Medical Insurance Exchange of California says his industry worries that federal tort reform might preempt strong reforms already passed in states like California, Texas and Alaska.

ALASKA RATES LOW

Firth's company and Norcal, the other big Alaska malpractice insurer, are both non-profit operations owned by the physicians who get coverage. If malpractice costs decline one year, Firth's company sends its policy-holders a dividend the next year.

When Alaska enacted tort reform, malpractice insurance rates had been rising. But now rates are coming down and dividends are growing. In 2008, Firth said, dividends offset 30 percent of the cost of the premiums for their policy-holders.

Firth is worried that weaker federal tort reforms might pre-empt stronger changes that states like Alaska have made. He'd welcome federal reforms that don't pre-empt state efforts.

Jim Jordan of the Alaska State Medical Association says Alaska's market is too small, and the tort reform too recent, to tell whether tort reform here will eventually reduce overall health care costs.

What it all adds up to: Even if tort reform could cut overall health care costs -- which there's no proof it will -- we shouldn't count on tort reform for big savings.

BOTTOM LINE: Alaska's experience and that of other states suggest tort reform isn't going to do much to cure costly flaws in the American medical system.

 


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