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Going In The Wrong Direction

Stanley Feld M.D.,FACP,MACE

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Strange things happen in California.  

In 1975,California Governor Jerry Brown signed into law the Medical Injury Compensation Reform Act (MICRA). It converted California from the worst state in the union to practice medicine into the best state to practice medicine by changing the limit on economic and non-economic damages to $250,000.

Malpractice insurance rates dropped, as did malpractice lawsuits. MICRA ruined the litigation business for California’s plaintiffs’ attorneys.

 Many malpractice attorneys and a number of researchers say that of the various med-mal tort reforms, the caps on noneconomic damages have had the greatest impact. (Anderson says that to be successful, a cap must be around $250,000.)”

In 2003 Texas followed, lowering economic and non-economic damages to $250,000. It decreased the malpractice business for defense attorneys in Texas.

Twenty-six states have now followed California’s lead. 

In 1975 physicians and consumers applauded Jerry Brown as a hero for this minimal reform.

Physicians stopped leaving California after the cap was placed on economic and noneconomic damages. The cost of medical care declined in 1975.

This year Jerry Brown is governor of governor of California and running for an unprecedented fourth term.

The California’s plaintiff attorneys are pushing for the cap on damages to be lifted to $1.1 million, from $250,000. Its provisions are embedded in Proposition 46. Proposition 46 also includes physician drug testing.

The malpractice insurance companies, hospitals and physician groups are warning that consumer healthcare costs will soar and doctors will flee to other states.

 Paul Phinney, a pediatrician and former president of the California Medical Association, said drug testing is a legitimate issue, but the proposal before voters is not the answer.

Phinney and other opponents have pointed to the disclosure that the testing provision was included as a political sweetener, with the intent of making Proposition 46 more appealing.

He said the initiative was designed to trick voters into supporting “something the consumer attorney lobby has wanted to do for a long time,” lifting a ceiling on damages for clients that has been in place since the 1970s. The lawyers “stand to benefit, personally and financially,” he added.

Dr. Ezekiel Emanuel, an author of Obamacare, believes tort reform is not necessary because it has little impact on healthcare costs. Dr. Emanuel ignores the facts just as Paul Krugman and many Obamacare advocates do. Dr. Emanuel has never been in private practice.

He says,

“ A useful threshold for savings is 1 percent of costs of healthcare, which comes to $26 billion a year. Anything less is simply not meaningful.”

One percent is arbitrary. It permits Dr. Emanuel to dismiss tort reform as a significant issue.

 Dr. Emanuel says only $1.3 billion results from the lack of tort reform. His source is not given. He also ignores physician over-testing, actual cost of malpractice insurance, the cost of lawsuits and the emotional impact on practices physicians and their practices.

He says,

“Health care spending in the United States typically increases by about $100 billion per year. Cutting a billion here or there from something that large is undetectable and meaningless. In health care, you have to be talking about tens of billions of dollars before you are talking about real money.

A study, closer to truth than just an opinion, disclosed:

The truth is a full accounting reveals that more than 10 percent of America's health expenditures per year are spend on tort liability and defensive medicine.

This study concludes that $242 billion a year extra spent because of the lack of tort reform.

The $242 billion is well above Dr. Emanuel’s fictitious threshold.

Physicians have admitted to over testing in the Massachusetts Medical Society survey . Physicians fear having to defend themselves against frivolous malpractice suits for potentially missing a diagnosis. The result is expensive over testing.

Most physicians love practicing medicine but cannot understand the unbelievably wrong direction President Obama is taking to reform the healthcare system.

Physicians are becoming disillusioned by politicians’ stated intentions to create a better healthcare system.

Two specific issues consistently agreed on by physicians were malpractice concerns with the need for tort reform and the lack of cohesive leadership among all physician groups to represent the vested interests of physicians and their patients.

The lack of tort reform is reflected in the percentage of healthcare costs by the Massachusetts Medical Society survey.

The amount of money wasted on defensive medicine can be extrapolated from this survey.

 I have written a series of blogs analyzing the impact of the Massachusetts Medical Society’s survey.

The extrapolated costs turn out to be about $700 billion a year. The real cost of defensive medicine is somewhere between $242 and $700 billion dollars a year.

 In 2003, Texas Governor Rick Perry and the Texas legislature unenthusiastically changed tort reform laws in Texas.

Rick Perry and the Texas legislature rewrote the medical malpractice laws, ending plaintiff attorneys’ practice of venue shopping for friendly judges. They also put a cap of $250,000 on noneconomic damages.

These reforms have changed the malpractice legal climate in Texas. The reforms limited plaintiff’s attorneys profitability on frivolous liability claims.

Texans believe that because of these reforms and the lack of a state income tax, Texas is the country's best state for economic growth and job creation.

A Perryman group report concluded,

“Perhaps the most visible economic impact of lawsuit reforms is the benefits experienced by Texans who have better access to high-quality healthcare.

Doctors and hospitals are using their liability insurance savings to expand services and initiate innovative programs; those savings have allowed Texas hospitals to expand charity care by 24%.”

The medical malpractice business for plaintiff’s attorneys has dried up in Texas. They are moving to other states. Physicians are applying for licenses to move to Texas away from high medical malpractice states. 

 “In 2001, according to the American Medical Association, Texas’ ranking in physicians per capita was a dismal 48th out of 50.”

“Beginning in 2003, physicians started returning to Texas. The Texas Medical Board reports licensing 10,878 new physicians since 2003, up from 8,391 in the prior four years.”

 “Dr. Perryman, subsequent to the issuance of his Report, informed TLR Foundation that at least 1,887 of those physicians are specifically the result of lawsuit reform.”

 The Texas Hospital Association reported a 70% reduction in the number of lawsuits filed against the state’s hospitals.

Medical liability insurance rates declined. Many doctors saw average rates drop between 20% to 50%.

The Perryman Group during the course of this study suggests that premiums are declining even further in 2008.”

The American Medical Association removed Texas from its list of states experiencing a liability crisis; marking the first time it has removed any state from the list.

 A survey by the Texas Medical Association also found a dramatic increase in physicians’ willingness to resume certain procedures they had stopped performing, including obstetrics, neurosurgical, radiation and oncological procedures during the Texas malpractice crisis.

Two simple changes in the tort laws made malpractice suits unprofitable for plaintiff’s attorneys.

Rick Perry has been so impressed with the results of his tort reforms that he now wants to extend his state's impressive tort reform record.

Mr. Perry is proposing a British-style "loser pays" rule, which would require plaintiffs to pick up the legal costs of their targets if they lose their suits.

 Almost all of America's economic competitors in the world follow this standard. “Loser Pays” as a deterrent to law suits decreases the cost of doing business resulting in lower prices and a competitive advantage for business. “Loser Pays” would deter frivolous lawsuits.

If President Obama really wanted to do something sensible about lowering the cost of healthcare, Texas style tort reform should become the law of the land, including loser pays all.

I hope California votes down Proposition 46. It is going in the wrong direction. It will not Repair the Healthcare System for California.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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