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Maintaining Optimism in the Face of Reality. Occasional observations on the state of the world, society, business and politics. Usually anchored by facts, always augmented by opinion.


Fact-Checking FactCheck.org on Tort Reform  | e-mail post

This post reflects why I am a hopeful cynic. First, I think we all owe some thanks to the fine people at the University of Pennsylvania for maintaining FactCheck.org. It tries to bring light to the many distortions, exagerations and falsehoods that we are seeing in this Presidential campaign. However, I have to take issue with their discussion of the medical liability reform question. To quote from FactCheck.org's recap of Friday's debate (emphasis is theirs):
As we said then, both the General Accounting Office (recently re-named the Government Accountability Office) and the Congressional Budget Office criticize the 1996 study the Bush administration uses as their main support for that claim. These nonpartisan agencies suggest savings from passage of limits on malpractice damages --- if there are any savings at all -- would be relatively small.

Bush's claim rests mainly on a single 1996 study by two Stanford economists who said caps on damage awards could hold down overall medical costs by 5% to 9%. They studied heart patients who were hospitalized, compared costs in states with and without limits on malpractice lawsuits, and then projected their findings to the entire health-care system.

But both the GAO and the CBO questioned such a sweeping conclusion. When the CBO attempted to duplicate the Stanford economists’ methods for other types of ailments they found "no evidence that restrictions on tort liability reduce medical spending."
One quick note about FactCheck's bold type. FactCheck only used bold type in two passages in their breakdown of the debate. The other place was calling out George Bush's interest in a tree farm, which is arguably distinct from a timber company. I'm going to look at previous debate breakdowns later to see if there is any consistency to that practice.

Now, I decided to actually go and peruse the CBO and GAO reports they cite, as well as the HHS report FactCheck discredits in their prior "de-bunking" of the Bush claim. (FactCheck actually has a dead CBO study link on their site, but I've included a working link.) [CBO HTML] [GAO PDF] [HHS PDF]

Now, one thing FactCheck doesn't explicitly call out is that the GAO study is only for D.C., Maryland and Virginia. But let's turn to that one first. Maryland and Virginia both have some type of tort restrictions, while D.C. does not. It's worth noting that a section heading for the GAO report is: "Limited Evidence Shows That Some Tort Reforms May Reduce Premiums and Defensive Medicine Costs" (p12) The GAO continues on page 13:
For example, one 1993 study found that obstetricians and gynecologists practicing in New York hospitals with high malpractice insurance premiums and claims frequency performed more cesarean sections than did physicians in hospitals with lower premiums and claim frequency. The Office of Technology Assessment concluded that this study presented strong evidence that hospitals with the excess cesarean sections were practicing defensive medicine. The Office’s broader study of defensive medicine, published in 1994, estimated that less than 8 percent of diagnostic procedures might be caused by liability concerns. However, the study stated that it is not possible to estimate the level and cost of defensive medicine. There may be a number of other reasons why a provider performs a particular service, including local standards of care, academic training, or requirements of managed care organizations. This study could not determine the primary motivation for a provider’s decisions.
OK, so it shouldn't surprise anyone that this sort of thing is difficult to measure. We are talking about an enormous segment of our economy. It is interesting to note that FactCheck misses the point of defensive medicine as discussed by the GAO report when FactCheck writes:
And a 1999 study in the Journal of Health Economics found only tiny savings – less than three-tenths of one percent – when studying the cost of Caesarian sections in states with limits on lawsuits, compared to states without limits.
Re-read the GAO passage from above: "The Office of Technology Assessment concluded that this study presented strong evidence that hospitals with the excess cesarean sections were practicing defensive medicine." The point isn't that cesarean sections cost more or less under a refored tort system, it that the more-expensive procedure is the one that is chosen as a defensive measure.

And don't even get me started that FactCheck criticizes the Stanford study for being too narrow in scope when they are citing equally narrow studies (that are aruably off-point).

But let's talk about facts FactCheck doesn't bother to include in their analysis, like a Harris Interactive Poll of physicians and their behavior in light of medical liability. [Link via Common Good]. The Harris Poll report says (emphasis mine):
[P]hysicians report that the fear of malpractice claims causes themselves and/or other physicians to:
  • Order more tests than they would based only on professional judgment of what is medically needed. (91% have noticed other physicians, and 79% report they themselves do this due to concerns about malpractice liability)
  • Refer patients to specialists more often than they would based only on their professional judgment of what is medically needed. (85% have noticed other physicians, and 74% report they themselves do this due to concerns about malpractice liability)
  • Suggest invasive procedures such as biopsies to confirm diagnoses more often than they would based only on their professional judgment of what is medically needed. (73% have noticed other physicians, and 51% report they themselves do this due to concerns about malpractice liability)
  • Prescribe more medications such as antibiotics than they would based only on their professional judgment of what is medically needed. (73% have noticed other physicians, and 41% report they themselves do this due to concerns about malpractice liability)
  • Just under two-thirds (61%) of physicians have noticed physicians being reluctant to make what they believe to be humane choices [in end-of-life situations] because of concerns that a family member might bring suit.
  • Half (50%) have noticed a physician resorting to aggressive treatments of terminally ill patients because of liability concerns.
  • Just under half (42%) have noticed a physician or staff member going against a patient's expressed wishes concerning life-prolonging medical interventions because of concerns that a family member might bring suit.
OK, but that's just an opinion poll. Maybe docs are exagerating their practice of defensive medicine. Let's talk about some macro-level numbers.

California enacted some pretty comprehensive tort reform (known by MICRA) back in 1975, so it seems like looking at healthcare costs in California versus the rest of the nation would be a good way to estimate what impact tort reform might have on a national basis. Now, it's worth noting that California's medical malpractice premiums are up a modest(!) 167% from1976-2000. Now, that is modest when compared to the 505% increase seen in the rest of the U.S.. (My quick math, which I am happy to have corrected, breaks that down to an annualized increase of about 7.2% in California compared to about 13.7% annual increases elsewhere.) But since the question of malpractice insurance being lower in tort-reformed states should be a given, let's look at the overall cost of medicine.

Of course, California has a high cost of living, so you might expect that per capita medical costs would be higher in California than the nation as a whole, but you would be wrong. According to the Kaiser Familiy Foundation, California's 1998 per capita healthcare spending was $3,429 versus $3,759 for the nation as a whole, or roughly 9% less than the national number. (Interestingly, this is the high range of the cost impact estimated by the Stanford study that FactCheck likes to discredit as being too narrow).

Or consider that a 2002 study by the Centers for Medicare and Medicaid Services (CMS) found that "Between 1991 and 1998, average annual growth in per capita health spending ranged from 3.5 percent in California to 7.3 percent in Maine." [Article in HealthAffairs as PDF ($)] [CMS press release with article highlights] The CMS actually ranks Mississippi right behind Maine for per capita health care increases.

I could go on, but my main point should be clear: FactCheck.org is providing at best incomplete, and at worst biased, coverage of certain issues. This is an incredible disappointment given that they are being looked to by all sides of the political debate for balanced and accurate discussion of these issues.

e-mail post | Link Cosmos | [Permalink]  |  | Saturday, October 09, 2004
Comments:
I am the Lucifer Morningstar. Your blog is like unto a Serpent dispensing the knowledge that induces Evil among otherwise Good Men.

Thank God for me.
 
1) It takes the issues out of the hands of the people. It is not the lawyers that determine awards, it is the jury. The jury hears the case and then decides on the facts of the case. If there is an issue, it is a poorly educated jury pool, or poor representations. Do you really want a politician determining how mush a leg or an arm is worth, or the life of your spouse? You are ceding power of the decision a person who is visited regularly by lobbyists, not by victims.

2) When you put a cap on malpractice, the physiological effect is there. eg. if the speed limit is 55, you drive 55. If the speed limit is 65, you drive 65. There is nothing that says you HAVE TO drive the maximum, but people feel almost obligated. As seen in Louisiana after tort reform, the average award went up. While the really big verdicts (say a million) were reduced to $500,000, but cases that would have only brought in $40,000 before were now getting $500,000. Pure human nature.

3) Even with a cap, doctors will still practice defensive medicine. Just because there is a cap doesn't mean they won't be sued. Just like car insurance, the more accidents you get into, the more your premiums go up. Even with a cap, if a doctor keeps getting sued, their premiums will go up. And if it does not increase premiums individually, you are only rewarding bad doctors and punishing good doctors.

4) Most of the increase in premiums is due to the poor investing by the insurance companies. Around 50% of an insurance companies assets are in investments. When the market tanks, so do reserves. If anything, doctors should be pissed of at Enron and World Com, not Joe Shmoe who is now missing a leg.


I would support a medical review board made up of both doctors and lay persons to screen suits before litigation to remove the really frivolous suits, but I don't think that you should deny a person compensation for medical malpractice.
 
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