Arnold Kling  

Malpractice Reform

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Richard Posner cautions against overstating the benefits of tort reform in health care.


It is always important to distinguish between financial and real costs. Insofar as malpractice liability merely transfers wealth from physicians to (some) patients, aggregate costs are unaffected. The real cost of malpractice liability is limited to the cost of the actual resources consumed by such liability, principally the time of lawyers and expert witnesses (roughly half the total amount awarded in judgments goes to pay lawyers and expert witnesses), unless defensive medicine is assumed to cost more than its benefits in improving treatment outcomes.

My view of medical malpractice lawsuits is that the true economic cost is not large. However, the goal of deterring bad care or weeding out bad doctors is not achieved.

Instead, gathering data on patient outcomes and making consumers aware of which treatments work and which doctors achieve good results would be a much better approach. It probably would cost more, but it would provide more benefits to the public.

For Discussion. What factors keep our current malpractice system from acting effectively against low-quality medical practice?


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COMMENTS (7 to date)
Dave Schuler writes:

Well for one thing the inclination of insurance companies to settle out of court means that the merits don't matter much. The inclination of juries to give awards to suffering patients means exactly the same thing. And even good providers can have bad luck. And a good lawyer can convince a jury that bad luck is negligence.

The bottom line is that the legal system is a poor substitute for the operations of the market but since there's precious little market operating in healthcare it's all we've got.

Hunter McDaniel writes:

I would guess that the economic costs of the current malpractice system are less in the direct cost of litigation and payouts and more in their effect on the practice of medicine itself.

Boonton writes:

I'm not so sure Dave. Auto insurance companies put a lot of resources into rating drivers yet I'm not aware that malpractice companies put nearly the same resources into finding out who are the riskiest doctors.

It's not all about lawyers, if malpractice companies weeded out bad doctors and funded research to establish best practices they would have real ammunition to fight lawsuits with less merit. I think a major element of the problem is the Guild Mentality in the medical profession. Look at the recent post over on Marginal Revolution (http://www.marginalrevolution.com/marginalrevolution/2005/01/medical_mistake.html) on the continued insistence on 30 hour shifts for interns despite the studies showing it causes medical mistakes.

David Bennett writes:


The direct costs can be significant in some specialties. Indirect costs of defensive medicine are high. Numbers I've seen vary all over the place, 100 billion is in the middle.

One big problem is the majority of people with legitimate complaints get nothing. Often they don't seel it. A second problem is the covering up of flaws, the whole system is dedicated to hiding them. In theory a more open system where they were addressed would reform.

Lawrance George Lux writes:

What factors keep our current malpractice system from acting effectively against low-quality medical practice?

Lawyers--simply put. Never knew a Lawyer who would not defend a Doctor at a State Examining Board hearing, even if he had won a dozen malpractice suits against the Doctor.

Boonton,
Interns are expected to work the 30-Shifts to train them to do their work under stress where they have supervision. I knew a Doctor so drunk he was being driven home from a Bar, but who came upon a multiple-car pileup. He provided Roadside assistence, went to the hospital, drank about a bottle of oxygen, and operated successfully on three of the Crash victims. A prime Malpractice case, except Everyone recovered. The Doctor was incorrigable, though, and wanted a Drink after he was done. lgl

Jon writes:

The tort system is merely a form of privatized justice. It seems funny that the same voices that complain that the government demeans people by making decisions for them (i.e. social security) is bothered by these same people making decisions in the jury room.

If you look at the jury's economic interest, they have nothing to gain by awarding a verdict against an innocent doctor and they lose through higher costs. These same people who are smart enough to invest their social security money certainly know that they ultimately pay for excessive verdicts.

While imperect, the tort system acts as a system of privatized law enforcement. Many key decisions are made by independent actors. Plaintiff attorneys have a strong incentive to take on only the worthy cases. Defense attorneys have an incentive to settle the most egregious cases. And many of the decisions are not made by that evil government.

Bill Fellers writes:

Jon,

I might agree with you if the jury selection process wasn't rigged.

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