Despite a number of obstacles limiting access to affordable insurance, America’s healthcare system remains the envy of the world. But as the current medical malpractice insurance epidemic raging across the Keystone State continues to unfold, the various symptoms behind why the cost of healthcare is rising at a rate about seven times that of overall inflation must be honestly diagnosed if we ever hope to come up with a cure.
Like most matters involving healthcare, the solutions to rising costs are not simple. However, one of the major contributing factors is actually good news for many patients: gigantic progress continues in medical science and medical knowledge. New technology and new treatments are available, new cures are being found, new drugs are being developed—and the resulting improvements raise healthcare costs.
But besides progress and innovative technology, what exactly is driving the latest increases? A study by the Center for Studying Health System Change found that inpatient and outpatient hospital care accounted for more than half (51 percent) of the overall increase. Spending for physician services accounted for 28 percent. The cost of prescription drugs, which accounts for the remaining 21 percent, has also come under heavy fire in recent years. But even with the latest increases, less than a dime of every healthcare dollar is spent on prescription drugs. What this also means is that drugs are replacing or shortening other medical treatments: another study concluded that every dollar spent on drugs results in a $4 decline on hospital spending.
No matter how many possible symptoms one can come up with, there is one common thread in this healthcare cost escalation. Most of us, as patients/consumers, have only a vague conception and little control of the cost of the care we consume—because our employers usually are responsible for picking up the tab. In fact, the average cost of employer-sponsored health insurance increased by 14.7 percent per worker in 2002—the largest single-year increase since 1990, and the forecast is for another 14.6 percent increase in 2003.
For better or worse, that situation may eventually be changed. Hopefully, we can all look forward to the continued advancement of medical science. Whether or not these advancements take place in Pennsylvania is a totally different story.
As President Bush correctly “diagnosed” during his visit to Scranton in mid-January, unnecessary medical costs do not originate in the waiting room or the operating room, but from frivolous litigation coming out of courtrooms all over America. It is even more disheartening to consider some of the specific reasons why the President chose Pennsylvania as the backdrop for his remarks on medical liability reform.
Only New York pays out more than Pennsylvania in medical malpractice awards, while in 1998, the city of Philadelphia alone paid out more malpractice settlements than the entire state of California. Indeed, a $100 million award granted by a Philadelphia jury was the third highest in the nation over the last decade.
Worst of all, according to a recent survey by the American Medical Association, Pennsylvania is one of only 12 states where patients are being denied quality care because hundreds of doctors are literally trading in their medical shingles for moving vans due to the outrageous cost of malpractice insurance—all this in a state in which the federal government already designates 729 boroughs and townships as “medically underserved.”
As years of experience in many states have proven, placing reasonable limits on the amount of non-economic damages that are typically awarded by over-sympathetic juries can significantly restrain increases in the cost of malpractice premiums. According to research conducted by the U.S. Department of Health and Human Services, states that have imposed limits of $250,000 or $350,000 have experienced premium increases averaging only 12-15 percent, compared to Pennsylvania’s staggering 77 percent under a system with no meaningful limits in place.
This type of litigation reform, reduces the incentive for predatory trial lawyers to file frivolous suits in the first place, helps legitimately injured patients to receive compensation more quickly, and enables even more Americans to get more for their healthcare dollars.
No matter what solutions the state or federal government come up with to address our current medical malpractice crisis, the best protection for patients can only come from highly-skilled medical professionals—not trial lawyers. In other words, establishing a high quality, free-market healthcare environment where costly litigation is the exception rather than the rule is the best way to ensure that there are even more qualified “doctors in the house” for Pennsylvania patients.
Matthew J. Brouillette is president and Ty McCauslin is former communications manager of The Commonwealth Foundation, a free-market public policy research and educational institute based in Harrisburg. For more information visit www.CommonwealthFoundation.org.