Medical Malpractice Reform Savings Would Be Large ($120 billion/year)

American Enterprise Institute ^ | December 30, 2009 | Andrew Biggs

[reaganaut1]

In a letter to Rep. Bruce Braley, the Congressional Budget Office further explains some of its analysis regarding the effects of medical malpractice reform on health costs and health outcomes. The letter as a whole is worth reading for a number of reasons, but one point stuck out to me.

Pessimists regarding malpractice reform have pointed out that it would save the federal budget only around $54 billion over ten years. I say “only” because this is nevertheless almost half as much as the entire Senate health bill would purportedly save, even leaving aside well-justified uncertainties regarding whether the Senate bill double-counts its savings. The deficit reductions from malpractice reform seem more certain than other savings proposed in the Senate bill (certainly more than the so-called “game changers,” whose defining quality seems to be that they don’t change the game all that much).

In any case, though, the CBO letter points out that savings would go beyond the federal budget. This makes sense, since most private sector healthcare that would be affected by changes in medical liability laws is not (or, at least, not yet) paid for by the federal government. CBO projects that “the combination of direct savings in malpractice costs and indirect savings in healthcare services would reduce national health spending in response to the proposed reforms by roughly 0.5 percent.”

National health expenditures for 2008 are estimated at $2.4 trillion. Cutting that amount by 0.5 percent would produce overall savings of around $120 billion each year, meaning the true savings to Americans are more than twice the $54 billion figure that is commonly cited.

Malpractice reform is hardly the solution to all our problems, as some seem to believe, but it’s also much too big an issue for liberals to dismiss so casually. (The fact that trial lawyers are a major Democratic constituency has nothing to do with it, of course. Just ask Howard Dean.) When the current health legislation fails to produce the promised savings—or even if it does, and we realize that they’re not nearly enough—this may be a direction in which to look.

[RangerM]

It amazes me that solutions that offer results seem to be dismissed, and others that involve significant investment in government infrastructure—time, money, assumption of power OVER the people—are the only ones considered.

It took how long for the government to issue “Stimulous Checks” a few years back? Why does it take until 2013 to get people coverage, when you could have the health insurance premium “stimulous checks” in peoples’ hands in a matter of a month or two?

That last paragraph is obviously rhetorical, since if the goal was for people to get insurance as fast as possible, that method would offer the quickest resolution.

[Dasaji]

There you have it! The legal lobby in this country ISN’T gonna let “health care” reform through if they aren’t going to get their piece of that $120B pie...

[stephenjohnbanker]

“It amazes me that solutions that offer results seem to be dismissed, and others that involve significant investment in government infrastructure—time, money, assumption of power OVER the people—are the only ones considered.”

Nothing amazing about it. We are dealing with politicians who are evil scum, and who reap 10’s of millions of dollars from trial lawyers. What IS amazing is that the GOP could expose this, but choose to hide in the basement.

[SueRae]

Exactly. I will acknowledge that Republicans have championed malpractice reform but they’ve been as effective as a fart in the wind on moving it into legislation.

[BuffaloJack]

My daughter’s boy friend is a pediatric dentist. Last year he quit his practice, because he said the malpractice insurance was more than the business brought in. He now is a contract dentist working for a franchise.