Saturday, September 11

Misunderestimating the problem

Angry Bear has a nice post on how Bush's "medical tort reform" doesn't address the explosive rise in our health-care costs.

According to the CBO, malpractice lawsuits cost about $24 billion in 2003. Their estimate is that tort reform could save around 25%, making for a $6B savings. But 2003 spending on health-care in 2003 was almost $1.6 trillion — so we're talking about less than 0.4%. Since health-care costs increased about 7% that year, it's clear that "tort reform" doesn't help.1

As Angry Bear says, Bush isn't interested2 in policies that lower health care costs, but I know someone who is.

[1] A subtle point nonetheless worth making is that the CBO study shows the growth rate in malpractice awards is half the growth rate of health-care as a whole, so tort reform is even less relevant than the above analysis indicates.

[2] Bush's plan doesn't lower costs, but it is good for HBOs, insurance companies, and the AMA. Of course, it's tough on the poor slob who gets the wrong leg cut off. Compassionate conservatism strikes again.


Rabbi Jonathan B. Freirich said...

None of this is a newsflash - the Bush Administration continues to think that all they need to do is lie to the public and repeat it as the truth over and over again, and people will believe it.

Unfortunately, they seem to be correct in their assessment. As H. L. Mencken said: "No one ever went broke underestimating the intelligence of the American people."

Anonymous said...

Although I tend to agree with you, let me note that your numerical analysis may not cover all the bases.

Although the sums actually transferred by lawsuits might be a tiny fraction of the total spent on health care, it is possible that there is a disproportionate effect on total costs. For example, doctors might undertake far more expensive treatments as a matter of routine instead of when actually needed in order to avoid losing lawsuits, thus increasing costs past the amount the suits themselves cause.

That said, I would tend to agree that tort reform, though a good idea, will not significantly change the cost of health care.

--Perry Metzger