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When President Obama Turns His Attention to Health Care Reform, To What Extent Should He Focus on Medical Malpractice Liability? Part One in a Two-Part Series of Columns


Tuesday, Feb. 10, 2009

At the moment, health care reform is going to have to wait for other, more pressing problems to be resolved by the Obama Administration.  In my opinion, the loss of Tom Daschle is less important than many people seem to think, but any delay in getting a new health care czar will mean that real reform will be months, if not years, away.

Once Obama turns his attention to health care reform, what role, if any, will medical malpractice liability reform play?  This is not any idle question.  The ill-fated Clinton health care proposal from the early ‘90’s proposed shifting liability from doctors to managed care organizations (MCOs).  Moreover, the idea that there might be a trade-off between the right to sue and universal health care is hardly new; it is a reality in Scandinavian countries and in New Zealand.

In order to understand the choices that will really face Obama and his health care czar, we have to clear away a few misconceptions about the relationship between the medical malpractice system and health care costs.  In this column, I’ll debunk several leading myths in this area.

The First Myth: Medical Malpractice Liability Costs Are Driving the Increase in Health Care Costs

First, there is a myth that medical malpractice liability costs are a major cause of increases in health care costs.  There is no evidence for this claim.  The portion of health care costs that go towards liability costs (the costs of insurance and of administration) is quite small—a few percentage points.  The costs may appear large to certain doctors who pay high medical malpractice insurance premiums, but the reality is that the total cost of liability for medical error is quite small.

I want to stress that the cost of medical error itself may not be small.  Rather, what is small is just the cost of insuring against lawsuits based on allegations of medical error, when compared to health care costs overall.  In fact, if recent studies by the Harvard Medical School are to be believed, the vast majority of medical errors are never reported and never compensated.  They result in costs that are borne by the victims of those errors.  But that is a social cost, not a cost contributing to the total financial cost of the medical liability system.

The Second Myth:  The Tort System Does a Poor Job of Figuring Out If Medical Malpractice Occurred and, If It Did, What It Cost

The second major myth is that there is a lot error in the adjudication of medical error when it is alleged.  To the contrary, the same Harvard Medical School study that I cited above concluded that the medical malpractice “system” is very good at (1) filtering out groundless claims and (2) paying less for lesser claims.  So the system is actually pretty good at recognizing meritorious victims and providing redress commensurate with the injuries they suffered.

When These Myths are Debunked, What Is the True State of the Medical Malpractice Compensation System?

All of the above tells us that the system is not too expensive (yet) and that it doesn’t pay money to undeserving claimants.   But some possible problems remain:  The system might still be (1) expensive relative to the alternatives, (2) bad at deterrence, and (3) relatively useless, because it reaches too few people.  Let’s take each complaint in turn:

Of course the system is expensive – but that is largely because this is a job that it is costly to do right.  It is well-known that “adversarial legalism,” which is how social scientists characterize the common law of medical malpractice, is expensive compared to (for example) a no-fault insurance scheme.  The whole point of common law negligence is to figure out things about which insurance is indifferent—for example, did the doctor “cause” the injury as a result of a breach of the “standard of care?”  Answering such a question requires expert opinions (often in duplicate), depositions, and courtroom testimony—all of which can be time-consuming and expensive.  But there is no substitute for a lawsuit and all its attendant costs if you want to get to the truth of whether the claimant was, in fact, injured due to a physician’s negligence.

It is less obvious that a system that is, in theory, good at identifying negligence would be bad at deterring negligence.  But there is no reason to assume that the former is entailed by the latter.  If medical negligence is error produced in the course of repetitious conduct, as Mark Grady has argued, then there will always be an irreducible level of “compliance error” in most of medicine—error that cannot be deterred.  However, it will also be the case that episodes of inadvertent compliance error will be indistinguishable from advertent error – error that can be deterred.  Thus, negligence (which focuses on the doctor’s fault or lack thereof) will collapse into strict liability (which would impose damages regardless of the doctor’s fault), for all intents and purposes, and the deterrence signal of medical malpractice judgments will be lost.

Third, and finally, if the Harvard Medical School study is to be believed, the real problem is that most malpractice is never recognized and is certainly never reported or used as the basis of a claim for compensation.  The real problem with this fact is not that lots of deserving victims are left uncompensated.  It is this:  What would happen if all of the uncompensated victims actually sued to collect the amount of damage due to them —how could the system survive the onslaught of claims?

Another Myth:  The Medical Malpractice System Suffers From a Problem We Can Fix

The myth about medical malpractice liability is that it can be made cheaper, that it can make medicine safer, and that it can be extended to cover most victims.  This is a myth because the last thing we would want to do right now is expand the reach of medical malpractice.  If we did so, we would only get an ever-more costly system of compensation without commensurate safety gains.

Medical malpractice in its current form does not have a “problem” that can be fixed.  It does what it is designed to do, which is to provide fine-grained corrective justice for a few people at great expense.  These characteristics are not evidence of the flaws of the medical malpractice system, but of its specific characteristics.  One would not criticize a hand-crafted tool for being expensive and hard to mass-produce.  Similarly, one should not criticize the common law of medical malpractice for being expensive and hard to mass-produce for all those who might need it.

Does this mean that a universal health care plan, which is supposed to be inexpensive and built for mass use, is incompatible with the tort law of medical malpractice that has developed since the 1800’s?  That question will be the subject of my next column, Part Two of this series.

Anthony J. Sebok, a FindLaw columnist, is a Professor at Benjamin N. Cardozo School of Law in New York City. His other columns on tort issues may be found in the archive of his columns on this site.

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