CBO's New Brief on Medical Malpractice Implies that Capping Awards is Not Enough
Jeff Lemieux
January 25, 2004

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A new issue brief from the Congressional Budget Office (CBO) contains a concise explanation of the savings from limiting malpractice awards, but doubts that capping damage awards would reduce "defensive medicine."  That makes sense.  Limiting awards in malpractice cases is not enough to really change medical practices and customs.  Award limits may be desirable, but we also need an emphasis on expedited compensation for victims and dramatic improvements in patient safety.

The malpractice crisis may not be widespread or affect all specialties, but even the most die-hard defenders of trial lawyers have to admit that the U.S. health care liability and compensation system is a disaster. 

Ideally the medical-legal system should prevent errors and encourage health providers to install reliable error-prevention systems.  It should weed out mistake-prone or inept providers.  It should create a database of knowledge that prevents the same mistakes from being made over and over again.  It should quickly and fairly compensate the injured and their families.  It should not inhibit the practice of medicine or nursing in certain locations because of locally-different legal climates.

The current U.S. malpractice system does none of those things.  Jackpot justice fails to prevent errors; instead, it encourages health providers to cover them up.  The system routinely fails to discipline bad doctors, hospitals or other health providers.  Patients have difficulty finding information about which providers are best -- the malpractice system is both mysterious to patients and their families, and despised by health providers.  The only real beneficiaries are the lawyers.

Meanwhile, the House and Senate are obsessed with controlling damages and attorneys' fees.  That is fine in itself, but the legislative gridlock that has prevented national action is not.

As a new issue brief clearly explains, CBO has consistently estimated that imposing caps on non-economic damage awards in medical malpractice cases would save money.  It would reduce malpractice premiums, which would pass through to slightly lower health costs overall.

But there is little persuasive evidence that reducing damage awards would change the practice of medicine -- reducing "defensive medicine" or otherwise making the health system more efficient and a better value.

That is why bills intended to cap awards should be coupled with new methods or options for malpractice cases -- the malpractice system should be reformed, so that both health providers and patients benefit.

One such idea is expert "health courts," which could quickly compensate victims of improper or inferior care.  Patients would not be obliged to use the health courts.  But if they did, the decision and its justification could be used as evidence in a subsequent lawsuit.  (To be sure, the decision could also help provide the basis for disciplinary action against errant health providers.)

Of course, patients could skip the expert court and go directly to lawsuits if they wanted.  And there should be a substantive debate between health providers and patient advocates on how health courts are formed, how experts are selected, and what the rules should apply for any subsequent lawsuits. 

We should also allow states to experiment with other types of expedited procedures, and evaluate what approaches work best.  The goal is not simply to speed up the compensation process and relieve a financial burden for health providers.  We must leverage the system to improve health quality and reduce malpractice itself, so that fewer errors occur and fewer episodes of health care end up in tragedy.

Senator Michael Enzi has introduced a bill allowing federal grants for state experimentation, including health courts.  The bill may not be perfect.  Moreover, it shouldn't be an excuse to delay patient safety bills that are already teed up in the legislative process. 

But honest consumer and patient advocates should take a close look.  We need more than caps -- we also need reforms that could lead to quicker compensation of victims and a real emphasis on quality improvements and error reduction in the health sector.

Links:
Congressional Budget Office Limiting Tort Liability for Medical Malpractice Economic and Budget Issue Brief (January 8, 2004)

Troyen A. Brennan and Philip K. Howard Heal the Law, Then Health Care Washington Post (January 25, 2003)
Common Good (Ideas for Legal Reform, including tort reform in Health Care)
Centrist Policy Network Enzi Reliable Medical Justice Act (S. 1518)
Congressional Budget Office Cost Estimate of HR. 5, the Help Efficient, Accessible, Low-cost Timely Healthcare (HEALTH) Act of 2003 (March 6, 2003)  (The bill would impose national caps on non-economic damages and attorney's fees.)