Medical Malpractice Myths and Realities: Why an Insurance Crisis is Not a Lawsuit Crisis
A Center for Progressive Reform White Paper No. 509, June 2005
34 Pages Posted: 19 Oct 2005
The United States is suffering both from a healthcare crisis, one of the symptoms of which is an unnecessarily high number of malpractice injuries, and from an insurance crisis. There is, however, no tort lawsuit crisis - in medical malpractice liability or otherwise. The insurance industry, managed-care companies, and organizations representing healthcare providers have invested a great amount of money in political contributions and media campaigns to convince policy-makers and the public that the civil justice system is fraught with meritless claims and is consequently the cause of the recent increase in malpractice premiums. But a mounting number of studies are finding that the tort system in general and malpractice liability in particular have been quite stable for the past two decades. And examinations of insurance industry practices reveal insurers' business decisions as the source of premium volatility - not the amount insurers are paying out on malpractice claim. More specifically, the recent premium spikes were insurance companies' attempt to make up for losses that they incurred as a result of offering artificially low premiums to increase their market share and depending instead on projected income from risky investments to meet future payout obligations.
In addition to shifting the blame for skyrocketing malpractice premiums from insurance companies to the civil justice system, corporate interests and the politicians they support have shifted the blame for the alarming lack of access to affordable, quality healthcare from the for-profit entities that run the U.S. healthcare system to malpractice victims and their attorneys. More specifically, advocates of restrictions on medical malpractice liability claim that rampant lawsuit abuse is driving physicians to practice so-called defensive medicine and to leave the medical field, both of which increase healthcare costs and diminish healthcare availability. Given the overwhelming evidence of stability in the civil justice system, it is not surprising that neither the defensive-medicine claim nor the physician-flight claim withstand empirical scrutiny. The Bush administration's primary support for the claim that doctors are ordering unnecessary tests and procedures out of fear of being sued in a study that two non-partisan congressional research agencies have dismissed as unreliable because it projects extremely limited findings onto the entire nation. More appropriately designed studies have found little or no evidence that fear of liability results in unnecessary medical expenditures. And regarding the supposed physician flight, the Government Accountability Office recently reported that the physician supply in this country has been increasing faster than the population for the past decade.
In short, the Bush administration, other tort reform politicians, and big businesses have fabricated a lawsuit crisis to defraud the American people of their right to redress for wrongful injury and their ability to hold the perpetrators - no matter how wealthy and powerful - accountable in the civil justice system. Information readily available to the administration and federal legislators promoting tort reform makes clear that civil justice system is not inundated with baseless claims, that insurance companies' losses in malpractice lawsuits are not driving premium hikes, that doctors are not disappearing, and that there is no surge in defensive medicine responsible for increased healthcare costs. Thus, the restrictions on medical malpractice liability that President Bush insists Congress must enact serve only to provide immunity (1) for healthcare providers who commit malpractice by denying victims access to the courts, and (2) for insurance companies, who raised premiums to recover from losses incurred as a result of their imprudent business practices and who now seek to evade responsibility for this imprudence and to maximize future profits by blaming malpractice victims for the premium hikes. Furthermore, the healthcare crisis will continue as long as the nation's focus remains fixed on a chimerical cause of that crisis - i.e., the civil justice system - instead of the real causes - i.e., the insurance, managed-care, and pharmaceutical industries that largely control healthcare delivery in the United States. Addressing the healthcare crisis requires ensuring everyone access to quality healthcare, which, in turn, requires reining in these corporations, not immunizing them from citizens' check on the public health risks posed by their profit-maximizing behavior.
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