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Tort Reform is Industry Bailout; or Is Tort Reform Government Bail-out?

November 14, 2009

Whoo, it’s gotten hot in the blogosphere.  I have had hundreds of hits now on my mention of Michigan’s problems and tort reform.  I had thought, in a rather naive fashion, that I was hitting on some trend-setting information with Michigan buying the bad stock of tort reform, but apparently I am not the only one writing about this.  Other bloggers have written about this too, and judging by the hugely increased traffic and e-mail and Twitter referrals to these posts, other people are getting grouchy about it.

A blogger named Firedoglake had this interesting information on the sham of tort reform:

In the early part of the decade, doctors clamored for tort reform in response to insurance companies jacking up their rates for malpractice insurance. Now, 46 states have passed some version of it. But ironically, malpractice premiums are lower in states without caps. Doctors did not benefit, and the patients who had their rights eliminated certainly did not benefit. So who came out winners from a decade of destroying the civil justice system?

That would be the insurance industry. Tort law changes made medical negligence cases so difficult to pursue that claims dropped precipitously. Between 2000 and 2006, the amount of money insurance companies paid out decreased by 15%. But that did not help the doctors because insurance companies never passed on those savings. In fact, the amount of money insurance companies took in from doctors increased by 120%.

To their credit, insurance industry execs and enemies of civil justice never denied they had pulled the wool over everyone’s eyes. “Insurers never promised that tort reform would achieve specific premium savings,” said the American Insurance Association in 2002. “We wouldn’t tell you or anyone that the reason to pass tort reform would be to reduce insurance rates,” said Sherman “Tiger” Joyce, head of the tort reform movement in 1999.

Hmm, and all this time I thought the industry execs promised lower health care costs.  Who believed this bullshit to begin with anyway?  I was only around 5  or 10 when some of this stuff was passed in Michigan, but what’s the Legislature’s excuse?

Apparently some bloggers blame it squarely on the Republican Party, but with Obama saying he “talked with some of his friends who are doctors” and caved to Republican demands because Obama wants to pass his own agenda.  What good is health care though if doctors can make mistakes, cause families to go bankrupt, medical injuries account for the 6th leading cause of death for Americans, and yet this is all supposed to cost less?  Well, dying at the hands of doctor as opposed to a mugger would still be dying, and I wouldn’t pay anything either way, so once you are dead, what good are health care savings?  Obama’s logic is pretty faulty there, but blogger Jon Perr wrote an article about the myths of malpractice and tort reform.  I think Mr. Perr’s argument speaks more strongly statistically than the other personal narrative pieces I have seen from doctors who say that they know somebody who did something because they were afraid of a lawsuit.  Well, I know business owners who put out ice on their sidewalks to prevent a lawsuit, but I don’t think it makes for a good statistical argument.  Jon Perr’s bit is much better:

But largely overlooked in the heated discussions of damage award caps, special health courts, expert panels and national compensation schedules is the inescapable truth that the medical malpractice system has only a negligible impact on overall American health care costs. Republican horror stories of a torrent of baseless malpractice suits producing “jackpot justice” that fuels rising premiums for physicians and patients alike while driving doctors from practice simply don’t comport with reality. The overstated, overblown, over the top and often outright false GOP claims suggest that the Republicans’ real target is not the flawed American malpractice system, but instead the nation’s trial lawyers whose campaign contributions help bankroll the Democratic Party.

Mr.Perr’s article has a number of comments from the “I-know-a-doctor-who” type of persona claiming that he or she has the inside track on lowering health care costs based on one situation where a doctor had to order a test he or she didn’t want to.  Not really a good enough reason to believe any doctor about how they will somehow lower costs by not ordering tests.

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