Three new studies have proven that laws limiting the amount which an injured patient can recover from the careless physician who hurt them do not have their desired effects and that those laws actually increase physician errors. Those studies show that putting a “cap” on the amount of damages that an injured patient can actually recover from their careless physician reduces the incentives to be careful. Those studies also show that these “tort reform” measures:
- actually increase physician errors;
- do not result in any healthcare cost savings; and
- do not increase the number of physicians in the state.
The basic principle underlying the field of Economics is that people respond to incentives of any kind. If you want something to occur, setting up a system which rewards that behavior will make it occur more often. Punishing the behavior will make it occur less. It’s simple common sense, but it’s also proven time and again to be an accurate predictor of human behavior. Society has many different examples. Rob someone and you’ll go to jail. Speed and you’ll get a ticket. Work hard to help your employer’s earnings increase, and your stock options will increase in value.
The basic idea behind “tort reform” completely contradicts this obvious, commonsense principle. One of the most common methods of “reforming” the tort system is to limit, or “cap,” the amount that a careless person has to pay to the person that they injured, regardless of what the injury is. These laws require the court to completely ignore the jury’s decision and a rewrite the verdict to a certain preset, “one-size-fits-all” amount if the independent and objective decision of the jury is more than what the law’s limits.
Apart from the obvious unfairness of making the jury’s careful judgment meaningless, these laws also limit the financial exposure of the careless person, which is the exact opposite of what we should be doing. In other words, these laws decrease the incentive to be careful in the future. That is exactly the opposite of what we as a society should be doing. It’s only by holding careless people fully and completely accountable to pay fair compensation to the person that they’ve injured that we give people incentives to be careful.
Since people respond to incentives, decreasing the “punishment” for physician carelessness predictably means the carelessness will increase. Physicians obviously don’t want to hurt their patients. But in this time of physicians being completely overrun and having little time to devote to each patient due to being stretched very thin because of health insurance company limits on how much they’ll pay and having to cram in as many patient visits as they can, it’s not surprising that reducing accountability results in more patient errors. For more information on these studies, see below.
The following appeared on http://centerjd.org/content/fact-sheet-new-studies-show-caps-damages-ruin-health-care on October 29, 2014:
NEW STUDIES SHOW: “CAPS” ON DAMAGES RUIN HEALTH CARE
(Printable PDF)It is now indisputable that “caps” on compensation in medical malpractice cases (so-called “tort reform”) harm not just injured patients and their families. They are also wrecking health care for everyone else. Three new studies by esteemed academics in the field of medical malpractice research confirm for the first time that “caps” lead to more medical errors, higher health care costs and no increase in patient care physicians.[1]
MORE MEDICAL ERRORS[2]
The authors examined five states that enacted caps during the last “hard” insurance market (2003 to 2005)[3] where standard Patient Safety Indicators (PSIs)[4] were also available for at least two years before caps passed (to allow for comparison). They then compared these data to other “control” states. They found “consistent evidence that patient safety generally falls” after caps are passed. Specifically:
“We find a gradual rise in rates for most PSIs after [caps were passed], consistent with a gradual relaxation of care, or failure to reinforce care standards over time.”
“The decline is widespread, and applies both to aspects of care that are relatively likely to lead to a malpractice suit (e.g., … foreign body left in during surgery), and aspects that are unlikely to do so (e.g., … central-line associated bloodstream infection).”
“The broad relaxation of care suggests that med mal liability provides ‘general deterrence’ – an incentive to be careful in general – in addition to any ‘specific deterrence’ it may provide for particular actions.…”
“We find evidence that reduced risk of med mal litigation, due to state adoption of damage caps, leads to higher rates of preventable adverse patient safety events in hospitals.”
HIGHER HEALTH CARE COSTS[5]
The authors examined health care spending trends in nine states that enacted caps during the last “hard” insurance market (2002 to 2005)[6] and compared these data to other “control” states. They found that “damage caps have no significant impact on Medicare Part A (hospital) spending, but lead to 4-5% higher Medicare Part B (physician) spending” [emphasis in the original]. The reasons may have to do with physicians practicing riskier medicine in “cap” states, such as performing “high-risk services or procedures,” which they avoid in states where the tort system’s “general deterrence” function (noted above) works properly. The authors note:
“Damage caps have long been seen by health policy researchers and policymakers as a way to control healthcare costs. We find, in contrast, no evidence that adoption of damage caps or other changes in med mal risk will reduce healthcare spending. Instead, we find evidence that states which adopted [caps] during the third wave of med mal reforms have higher post-cap Medicare Part B spending.…”
“[O]ne policy conclusion is straightforward: There is no evidence that limiting med mal lawsuits will bend the healthcare cost curve, except perhaps in the wrong direction. Policymakers seeking a way to address rising healthcare spending should look elsewhere.”
NO INCREASE IN PHYSICIANS[7]
The authors examined physician supply in nine states that enacted caps during the last “hard” insurance market (2002 to 2005)[8] and compared these data to other “control” states. They found “no evidence that cap adoption predicts an increase in total patient care physicians, in specialties that face high med mal risk (except plastic surgeons), or in rural physicians.” Specifically:
“[W]e find no evidence that the adoption of damage caps increased physician supply in nine new-cap states, relative to twenty no-cap states.”
“Consistent with this analysis, we also find no association between med mal claim rates and physician supply in state and county fixed effects regressions over 1995-2011.”
“Physician supply does not seem elastic to med mal risk. Thus, the states that want to attract more physicians should look elsewhere.”
NOTES
[1]Bernard S. Black, David A. Hyman and Myungho Paik, “Do Doctors Practice Defensive Medicine, Revisited,” Northwestern University Law & Economics Research Paper No. 13-20; Illinois Program in Law, Behavior and Social Science Paper No. LBSS14-21 (October 2014), http://ssrn.com/abstract=2110656; Bernard S. Black, David A. Hyman and Myungho Paik, “Does Medical Malpractice Reform Increase Physician Supply? Evidence from the Third Reform Wave,” Northwestern University Law & Economics Research Paper No. 14-11; University of Illinois Program in Law, Behavior and Social Science Research Paper No. LBSS 14-36 (July 2014), http://ssrn.com/abstract=2470370; Bernard S. Black and Zenon Zabinski, “The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform,” Northwestern University Law & Economics Research Paper No. 13-09 (July 2014), http://ssrn.com/abstract=2161362.
[2]Bernard S. Black and Zenon Zabinski, “The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform,” Northwestern University Law & Economics Research Paper No. 13-09 (July 2014), http://ssrn.com/abstract=2161362.
[3]Florida, Georgia, Illinois, South Carolina and Texas. Illinois’ and Georgia’s caps were found unconstitutional in 2010, but that is the last year examined by the authors and so had no impact on their results.
[4]PSIs are the “standard measures of often preventable adverse events, developed by the Agency for Healthcare Research and Quality (AHRQ).” They include operative and post-operative errors, infections, birth-related errors and cases at risk, like hospital-acquired pneumonia.
[5]Bernard S. Black, David A. Hyman and Myungho Paik, “Do Doctors Practice Defensive Medicine, Revisited,” Northwestern University Law & Economics Research Paper No. 13-20; Illinois Program in Law, Behavior and Social Science Paper No. LBSS14-21 (October 2014), http://ssrn.com/abstract=2110656.
[6]Florida, Georgia, Illinois, Mississippi, Nevada, Ohio, Oklahoma, South Carolina and Texas.
[7]Bernard S. Black, David A. Hyman and Myungho Paik, “Does Medical Malpractice Reform Increase Physician Supply? Evidence from the Third Reform Wave,” Northwestern University Law & Economics Research Paper No. 14-11; University of Illinois Program in Law, Behavior and Social Science Research Paper No. LBSS 14-36 (July 2014) http://ssrn.com/abstract=2470370.
[8]Florida, Georgia, Illinois, Mississippi, Nevada, Ohio, Oklahoma, South Carolina and Texas.
Fact Sheet: New Studies Show: “Caps” On Damages Ruin Health CareFact Sheet
Medical Malpractice