Tort Reform Key to Reducing Health Care Costs
As Washington continues debating how to curb health care costs, one area largely ignored is medical malpractice reform. Ample evidence from states indicates tort reform is central to overhauling the healthcare system.
The Pacific Research Institute’s (PRI) 2008 Tort Liability Index ranks states’ tort laws, giving Pennsylvania a lowly 45. Lawrence J. McQuillan, co-creator of the index, says, “Because Pennsylvania has done little in terms of meaningful tort reform compared to other states, it is poorly positioned to contain its future tort costs and risks.”
The index also rates Pennsylvania 14th from the bottom in medical malpractice losses. A related study by the National Practitioner Data Bank found that the aggregate judgments and settlements paid by Pennsylvania medical professionals were exceeded only by New York.
Pennsylvania is losing doctors to other states, in large part because of the high costs of malpractice insurance in the Commonwealth. PRI poignantly notes that, in many ways, Pennsylvania is a “judicial hellhole,” a designation it gives to regions in which doctors are reluctant to set up shop because personal injury lawyers seek excessive settlements, favorable precedents, or both.
Many Pennsylvania physicians practice defensive medicine, especially those who pay the most for liability insurance because they are in high-risk fields. In order to reduce their legal costs, nearly all doctors avoid procedures and patients known to have higher litigation rates.
In 2002 Governor Schweiker, in an effort to keep doctors from leaving Pennsylvania, signed legislation creating MCare (Medical Care Availability and Reduction of Error), a supplemental malpractice insurance program that every physician must pay into. The MCare Fund provides money for medical malpractice awards that exceed $500,000 (the amount which doctors are required to insure themselves against). But MCare simply serves as a pot of money for trial lawyers to go after, eschewing real tort reform.
Unlike Pennsylvania, other states have enacted meaningful tort reform with positive outcomes. What lessons can Pennsylvania learn from other states?
Texas has experienced an influx of physicians and lower medical malpractice insurance premiums since capping jury awards for “pain and suffering” at $750,000.
Indiana set the time limit for filing a medical malpractice lawsuit at two years from the alleged act of harm, and Kentucky set it at one year from the act or reasonable discovery (but no more than five years after the act.) These actions have lowered litigation rates while ensuring trial for incidents that are more apparent.
Pre-trial screenings and arbitration are methods of dispute resolution that provide an alternative to trial. Nebraska mandates a review of malpractice claims by a medical-review panel before the case can proceed to trial. Oregon, meanwhile, requires all parties to participate in dispute resolution within 270 days of the malpractice lawsuit being filed.
A fair and efficient tort system is a significant component of a thriving free-enterprise economy. Allowing for unlimited jury awards, on the other hand, imposes significant costs on patients and forces doctors to move to other states.
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Abhilash Samuel is a Research Associate with the Commonwealth Foundation (www.CommonwealthFoundation.org), a public policy education and research institute located in Harrisburg.