Off the top, it looks dishonest. There are 1 m physicians in US. If average physician income is $250k (which is high estimate)with 100% overhead ( high but probably close), that amounts to $500 b of the $ 1,700 b health care spending , yet the first assertion in the PDF is that the the comparative over-spending is $650 b and “physicians and hospitals” account for $436 b of that. It then lists provider response to high margins and the fact that care is based largely on physician judgment as the first two responsible factors. Two things come to mind. Even in a more extended discussion later on in the paper ( I haven’t read the whole thing), and especially relative to the other countries, there is no interpolated discussion of the rapacious US trial lawyer bar and how this influences “physician judgment.” Nor is there discussion of an everyday observation, namely that there are few hospitals in the country that in any five year period are not renovating or building a new wing. I heard the head of the buildings trades council in Philadelphia on the Dom Giordano program one time, and he told me all I ever needed to know about that. He sat on the board of the hospital system, it may have been Tennant, it could have been others as well. The hospital expansion projects use union workers, and a prime goal of negotiations for the building trades contracts is , try to guess, premium health benefits ( the Cadillac plans). The fact that this PDF ignores ( or fails to highlight, if you have seen discussion in the parts I haven’t read)leads me to believe it is an argument constructed on a Democrat/ socialist template.
Thanks for having taken the time to read that (and to anyone else who followed that link but did not comment) – it’s a haul, especially if you follow the links back to the full study. Very few people are willing to make that sort of effort to educate themselves, which is one reason the quality of such discussion is usually so information-poor.
IMO, the direct and indirect costs of litigation are one of the most difficult costs to quantify, and since there have been very divergent study results, you can cherry-pick studies to support the position that it is a quite significant contributor (7-9%) or a very minor one (less than one percent).
One way of assessing the extent to which such litigation is a problem is to compare the US system and costs with similar systems in other countries which have an Anglo-Saxon based legal system, the most widely cited recent study of this sort is:
http://www.worldcongress.com/events/nw600/pdf/HealthSpendinginTheUnitedStates.pdf
My conclusion after extensive reading is that litigation is not one of the major cost drivers in the US system.
And even if you accept the higher estimate, and assume that such costs are 10% of total spending, and could arrange to somehow completely eliminate such costs (see below) and achieve a one-time savings, you are still left with the remaining cost (and rapidly increasing) cost differential.
You also have to keep in mind that to some extent litigation is a market mechanism – there is always going to have to be some sort of quality control external to the provider stream, and some means of financial compensation for mistakes made (if only to the extent of rectifying to the extent possible the medical results of such mistakes).
If you don’t like a “litigious society” in which seeking recompense is an individual responsibility, conducted on a case-by-case basis in the courts, then you have to specify some other mechanism, most of which are also unpalatable to conservatives (for example, cost-effectiveness regimes, where “best practice” is defined, and providers who comply with the recommendations have greater protection from sanctions for “malpractice”).
So it’s not as though a transition to some other mechanism is going to eliminate such costs, it will just be somewhat more or less efficient and “costly”.