A new report reveals that $54.4 billion is spent annually on medical malpractice systems; 2.4% of America’s health care spending. America’s health care has existed with two separate, but related crises – its high rates of medical errors, and dissatisfaction with the malpractice liability system. The Institute of Medicine, in a 1999 study estimated that between 44,000 and 98,000 thousand patients died annually as a result of avoidable errors in inpatient hospital treatment.

This perceived “crisis” has been around for much longer than people realize. Over 20 years ago, Howard H. Hiatt, a Harvard University public health experts, wrote that an “atmosphere of crisis has enveloped our system of medical-malpractice litigation and liability insurance.”

An article in the latest issue of Health Affairs tries to answer the question “What is the reality?”. Is America’s main problem too many medical errors that kill or harm patients, or that doctors and hospitals and other health care providers face the threat and reality of too many lawsuits and high insurance premiums which raise the cost of medical services as a whole? Or might it be a mixture of both things?

The report informs that recent studies have helped clear up some issues related to medical malpractice, as well as putting several myths to bed:

  • Myth 1. Too many claims – we all thought too many people were suing, and that claims were becoming rampantly out of control – a study revealed that a mere 1.53% of people who suffered harm as a result of medical treatment filed malpractice claims.
  • Myth 2. Medical malpractice claims bump up medical costs enormously – many of use believe(d) that the medical malpractice system raises the price of health care in the USA considerably. However, a new comprehensive study has revealed that it may bump up health care spending by 2.4% at the most.

2.4% may not sound like much, but in an economy the size of the USA it adds up to a lot of dollars – $54.4 billion each year; that is the amount spent on medical liability costs in America annually.

America’s over-defensive medical system leads to too many medical tests and treatments – behaviors typical of doctors trying to reduce their liability risk.

The disparity in liability insurance rates in America is unbelievable, if one goes by what this latest report quotes. The report mentions a 2003 study of seven US states – surgeons in Dade County, Florida had to pay a large insurer $174,300 annually, compared to just $10,140 for equivalent surgeons in Minnesota.

Tort reform legislation – in some states there is a limit on non-economic damages that a malpractice lawsuit can pay out. Non-economic damages include such things as pain and suffering that the patient and loved ones had to endure; it also includes wrongful death. There is evidence that some of these states are succeeding in holding down the increase in insurance premium costs.

Reforming the system may reduce the “considerable psychological cost to providers who worry about the possibility of devastating malpractice lawsuits”.

However, trying to get perceptions and reality to agree with each other is extremely challenging. According to most studies, doctors’ fears of malpractice risk are considerably greater than they should be, the report describes them as “pervasive and overstated”. Put simply, doctors imagine the worst possible outcomes, and unwittingly exaggerate the risk of their chances of occurring.

The report comments that federal health reform may help solve part of the problem. If more people have medical coverage there will be fewer individuals needing to sue in order to cover their medical expenses.

“Medical Malpractice and Errors”
Health Affairs, 29, no. 9 (2010)

Written by Christian Nordqvist