CBO Disputes Effectiveness,
Equity of Medical Liability Reforms
Janaury 16, 2004- A Jan. 8 Congressional Budget Office
(CBO) study
finds that, while medical liability reforms could reduce malpractice
insurance premiums by an average of 25 percent to 30 percent
nationwide, they would reduce overall healthcare spending
by only 0.4 percent to 0.5 percent. This contradicts existing
assumptions that tort reform would generate significant healthcare
savings by reducing the practice of "defensive medicine."
Referencing this and other examples, the CBO concludes that
proposed medical liability reforms do not establish "economic
efficiency" (provide maximum net benefit to society).
The reforms do not assure fairness and equity ("create
benefits or costs for society as a whole"). Instead,
they only "modify the distribution of gains and losses."
Capping contingency fees, for example, could reduce the number
of frivolous lawsuits. However, such caps also could curb
access to legal representation among patients with legitimate
yet complex claims. Taking an alternative perspective, the
study also disputes claims that medical liability reform undermines
"the deterrent effect of such liability" and contributes
to higher rates of malpractice. Physicians, the CBO explains,
are "generally not exposed to the financial cost of their
own malpractice risk." Instead, insurance premiums reflect
broad factors such as physician specialty and location (vs.
an individual's practice patterns). The CBO adds that very
few incidents of medical negligence lead to malpractice claims.
Given their findings, the CBO concludes that limiting medical
liability would not have "a significant effect, either
positive or negative, on economic efficiencies." It suggests
that reform proposals should focus more on equity and less
on economic efficiency.
Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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