These are the personal views of Alan B. Miller, founder, chairman and chief executive of Universal Health Services Inc. (UHS):
As the debate in Washington over health-care reform appears to be drawing to a close, it is disappointing to see that tort and medical-malpractice reform is nowhere to be found in the final bills.
No matter what the government does to reform health care, without tort reform to limit awards for noneconomic damages, the cost of malpractice insurance will continue to rise. That means that, in states that have not enacted reform, the number of physicians in particularly vulnerable specialties, such as obstetrics, orthopedics and neurosurgery, will continue to shrink.
As a result, it will become increasingly difficult for many Americans to find physicians to provide the care they need. That will reduce access to health care and cost lives.
Malpractice lawsuits have a devastating impact on physicians, both psychologically as well as economically. In Florida, for example, medical-liability premiums for an OB/GYN in Dade County were approximately $238,000 per year in 2007. That’s more than $2,200 per baby for a doctor who delivers two babies a week.
More importantly, the threat of frivolous lawsuits forces doctors to practice defensive medicine by ordering unnecessary tests solely to cover themselves in the event of a lawsuit. Estimates are that defensive medicine adds $100 billion to $200 billion a year to the cost of health care in this country.
President Obama has acknowledged that defensive medicine contributes to the high cost of health care in the United States.
“I don’t believe malpractice reform is a silver bullet,” the president said to a joint session of Congress on Sept. 9, “but I’ve talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs.”
While the president made an accurate statement, he has taken no action to rein in trial lawyers. Instead, he ordered “demonstration projects” in several states. Demonstration projects are a waste of time and money because we already have the data we need to know the benefits of tort reform.
California enacted tort reform in 1975. That’s 34 years of actual data we can draw from. Since then, 27 other states have enacted tort reform. We know that tort reform has been an unquestionable success.
Before Texas’ 2003 reform, 150 of its 254 counties had no obstetricians and 120 counties had no pediatricians. Since reform limited noneconomic damages to $250,000, malpractice-insurance rates have declined an average of 21%, with almost one-fourth of doctors seeing a 50% decrease. In Harris County, which includes Houston, there were 41% fewer malpractice lawsuits filed in 2005 than in 2003.
As a result, more than 7,000 new physicians moved into Texas by 2008 and the State Licensing Board anticipates that another 5,000 physicians would enter Texas by the end of 2010.
Obama has said that health-care reform should reduce costs, cover the uninsured and not increase the federal deficit. The nonpartisan Congressional Budget Office reported in October that reduced settlement and judgment awards would save $54 billion in government health-care expenses over the next 10 years.
The CBO based its findings on reform that has already been adopted by many states. One important change is capping noneconomic damages, which are based on emotion and can’t be measured, at $250,000. There would be no limit on economic damages, such as lost income or the cost of long-term medical care, which can be actuarially measured and predicted.
A recent poll by the Health Coalition on Liability and Access showed that 70% of Americans favor tort reform. They know that, without any cost to taxpayers, tort reform would help lower the cost of health care, make medical care more accessible and, by eliminating defensive medicine, would spare Americans from needless testing.
Yet, Congress and Obama have avoided including tort reform in any health-care plan. In fact, House Speaker Nancy Pelosi and her fellow Democrats have added a rollback provision that could block federal subsidies to states that impose their own caps on noneconomic awards. Instead of working to benefit the people, Pelosi has instead protected trial lawyers, who have been the second-largest contributors to Democratic congressional campaigns.
Indeed, in a rare moment of candor for a politician, Howard Dean, former chairman of the Democratic National Committee, said it best during a town-hall meeting on Aug. 25: “The reason that tort reform is not in the bill is because the people who wrote it did not want to take on the trial lawyers. That is the plain and simple truth.”
The hospital industry, of which I am a member, has agreed to absorb $155 billion in reduced reimbursements to help lower the cost of health care. Insurance companies, medical-equipment manufacturers and physicians are also among those who have agreed to make sacrifices to help Obama achieve his goals. Yet the influential trial lawyers have been unwilling to accept anything that would lessen their ability to generate revenue by suing health-care providers.
It is time for Obama and Congress to stand up to the trial-lawyer lobby. Unfortunately, it is difficult to take seriously any attempt to reduce the cost of health care that doesn’t include meaningful tort reform.
I fear that Congress and the president will squander this seminal moment in health-care reform for all Americans.
(Alan B. Miller is also the author of “Health Care Reform that Makes Sense.”)
