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April 4th, 2012

Where is the Obama Administration’s Pledged Commitment to Medical Liability Reform?

John H. Cochrane’s Wall Street Journal piece, “What to Do on the Day After ObamaCare”, offers up a number of thoughtful, market-oriented health care reform alternatives that could quickly begin to reduce health care costs should the Supreme Court strike down current law.  Glaringly omitted from Mr. Cochrane’s proposals, however, is any mention of meaningful medical tort reform.

A 2005 National Academy of Sciences report found that a whopping 30 percent of U.S. health-care spending was unnecessary or wasteful, to the tune of $600 billion to $700 billion each year.  And numerous surveys since indicate that overwhelming majorities of physicians admit that much of this unneeded spending results from the practice of “defensive medicine” – the ordering of medically unnecessary tests and procedures simply to minimize the likelihood of meritless lawsuits.  So even if only a significant fraction of the unnecessary and wasteful spending identified by the NAS can be linked directly to defensive medicine, it should be plainly obvious to all serious policymakers that at least tens of billions, and perhaps as many as hundreds of billions of dollars of inflationary health-care spending could be eliminated annually with appropriate tort reforms.

To that end, three Republican congressional leaders – Senate Judiciary Committee Ranking Member Charles Grassley (IA), House Judiciary Committee Chairman Lamar Smith (TX) and Senate Finance Committee Ranking Member Orrin Hatch (UT) – this week sent a letter to Health and Human Services Secretary Kathleen Sebelius, questioning the administration’s commitment to medical liability reform in light of President Obama’s previously expressed support for it.

“Frivolous lawsuits, the high cost of malpractice insurance and excessive damages awards are dragging down our health care system,” the letter reads in part.  But the administration’s “description of the research being funded” through the “Patient Safety and Medical Liability Reform Demonstration and Planning grants” authorized by the president’s health care law “does not mention, much less emphasize, reforms to medical malpractice laws . . . .”   

“[N]one of the $23.2 million awarded has gone to researching or implementing ‘traditional’ medical malpractice reforms,” the lawmakers’ letter continues, “such as caps on punitive damages, caps on noneconomic damages and limits on the percentage of an award that can be taken by a plaintiff’s attorney under a contingency fee agreement,” all of which have proved effective in the many states that have adopted them.

Whether the president’s health care law passes constitutional muster or not, only personal injury lawyers and those dependent on their political and charitable largesse would argue that the current medical liability system does not generate needlessly monstrous costs that are passed on to all health care consumers and does not effectively work to restrict access to health care.  The House has already passed H.R. 5, legislation focused on the traditional medical liability reforms favored by Sens. Grassley and Hatch and Rep. Smith.  With or without the administration’s blessing, the Senate should now act similarly.

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