Friday, October 09, 2009

CBO Scores Tort Reform

CBO Letter to Senator Hatch

What Hatch proposed:
Several times over the past decade, CBO has estimated the effects of legislative tort reform proposals. Typical proposals have included:

 A cap of $250,000 on awards for noneconomic damages;
 A cap on awards for punitive damages of $500,000 or two times the award for economic damages, whichever is greater;
 Modification of the “collateral source” rule to allow evidence of income from such sources as health and life insurance, workers’ compensation, and automobile insurance to be introduced at trials or to require that such income be subtracted from awards decided by juries;
 A statute of limitations—one year for adults and three years for children—from the date of discovery of an injury; and
 Replacement of joint-and-several liability with a fair-share rule, under which a defendant in a lawsuit would be liable only for the percentage of the final award that was equal to his or her share of responsibility for the injury.
What doctors would save in premiums and as a share of overall medical expenditures
The Effect of Tort Reform on Premiums for Medical Liability Insurance
National implementation of a package of proposals similar to the preceding list would reduce total national premiums for medical liability insurance by about 10 percent, CBO now estimates. That figure reflects the fact that many states have already enacted at least some of the proposed reforms. For example, about one-third of the states have implemented caps on noneconomic damages, and about two-thirds have reformed their rules regarding joint-and-several liability.

CBO estimates that the direct costs that providers will incur in 2009 for medical malpractice liability—which consist of malpractice insurance premiums together with settlements, awards, and administrative costs not covered by insurance—will total approximately $35 billion, or about 2 percent of total health care expenditures. Therefore, lowering premiums for medical liability insurance by 10 percent would reduce total national health care expenditures by about 0.2 percent.
Not quite the panacea that the Right has been promising here. How much would that effect the Federal deficit?
In the case of the federal budget, enactment of such a package of proposals would reduce mandatory spending for Medicare, Medicaid, the Children’s Health Insurance Program, and the Federal Employees Health Benefits program by roughly $41 billion over the next 10 years (see Table 1).

I particularly like the part that both caps your possible award and then subtracts from that any proceeds you might have gotten from insurance and workers comp. That is if by some chance you actually have catastrophic health insurance designed to meet your lifetime needs should something terrible happens you wouldn't have any recourse against malpractice at all.

Republicans need to stop dodging and ducking and get realistic about where the problems are. And it is not because meanie Democratic trial lawyers are driving doctors to perform defensive medicine. Americans deserve health coverage. We cannot continue to operate like we are a second world country where the wealthy get care and the working poor go without.

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