Legal Briefs newsletter #28: The Medical Liability Crisis Affects Us All, by Edmund F. Haislmaier

We’ve just witnessed an unfamiliar phenomenon in the U.S. – strikes by doctors.

While such strikes are commonplace in countries with nationalized health systems, they have been rare in the U.S.

But unlike their foreign counterparts, U.S. doctors aren’t striking over pay or working conditions. Rather, physicians in West Virginia, New Jersey and Florida engaged in work stoppages to pressure their lawmakers to curb runaway lawsuits that are making medical malpractice insurance unaffordable.

Nor are these states the only ones affected. Pennsylvania just averted, at least for now, a similar doctor’s strike, while last summer a trauma center in Las Vegas, Nevada was forced to temporarily close when its surgeons, unable any longer to afford their malpractice insurance, walked off the job.

In addition to these five states, the American Medical Association has identified seven others currently facing a medical liability crisis: Georgia, Mississippi, New York, Ohio, Oregon, Texas, and Washington.

The medical liability crisis is turning into a health care access crisis. Without doctors to provide treatment, even those who can pay for care can’t get it. Indeed, in Mississippi it is now almost impossible to find a doctor to deliver a baby anywhere outside of the largest cities.

The crisis is being driven by both the increasing number of lawsuits and the growing size of awards for non-economic damages – that is, additional awards on top of those for tangible losses such as the plaintiff’s cost of care and lost income. Yet, the system offers no assurance that those who actually are injured will be compensated.

The good news is that some states don’t have this problem. The most notable is California, which 25 years ago passed a successful tort reform law that, among other things, caps non-economic damages at $250,000 but doesn’t limit awards for tangible losses. In California, malpractice premiums are comparatively affordable, doctors are staying in the state, and patients continue to have access to quality care.

Comparisons with California show the difference that tort reform makes. In Florida, malpractice insurance for an obstetrician costs between $143,000 and $203,000 a year. Given that the average obstetrician delivers about 100 babies a year, that adds about $1,400 to $2,000 to the cost of delivering each newborn. In contrast, malpractice insurance premiums for OB’s in California are $23,000 to $72,000 a year, or about $200 to $700 per newborn.

But these aren’t the only costs of the metastasizing medical litigation cancer. There are even bigger economic and social costs.

To guard against lawsuits doctors increasingly practice “defensive medicine” – that is, prescribing tests, procedures and drugs that they don’t believe are medically necessary but that enable them to say in court that they did everything possible for the patient. One study estimates that this adds $20-$40 billion a year just to the cost of federal health care programs such as Medicare and Medicaid. Furthermore, unnecessary treatments pose additional risks to patients and contribute to problems like the growing antibiotic resistance of infectious bacteria, which affects everyone.

Another effect is that doctors who are retired or not actively practicing are prevented from providing charity care as part-time volunteers in clinics, as many used to do, because neither they nor the sponsoring organizations can afford the necessary malpractice insurance.

Finally, instead of encouraging doctors and other health professionals to identify and correct problems in the health care system, the threat of lawsuits instead encourages them to ignore or hide problems – making medicine less, not more, safe for everyone.

In short, the medical liability crisis no longer affects just doctors – it affects us all.

by Edmund F. Haislmaier

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.