Medical Malpractice Litigation Really Isn't All That Special

One of the common threads you see in the criticism of medical malpractice litigation from the medical community is that medicine is special - it's so complex that it's just not reasonable to trust malpractice litigation to a jury of laypersons. We are told that we need "health courts", an undefined concept that generally appears to translate into "courts where people like me get to decide what is or is not malpractice." And all of that is fine, insofar as it goes, except...

There's actually nothing special about malpractice litigation. Many incredibly complex cases are resolved within the jury system. An argument could be made that all technologically complex cases should be removed from juries, but that's really an argument for the abolition of the jury system itself - and disregards a long and involved history of how we came to have juries in the first place, why we protect the right to trial by jury in the Constitution, and why we have perpetuated that system into the modern era. The fact is, not all malpractice cases are complex. You're supposed to remove the patient's diseased, left kidney, and you instead remove the patient's healthy, right kidney? That's not difficult to understand. And sometimes what one might assume to be simple cases, let's say a car accident, can end up involving experts in engineering, accident reconstruction, economic damages.... Let's not forget, also, that juries are called upon to decide incredibly complex cases involving business disputes, environmental contamination, intellectual property, antitrust.... There's simply nothing about the complexity of medical malpractice litigation that meaningfully distinguishes it from other types of litigation.

Dr. Robert Centor argues,

We need special health courts. The jury process induces lawyers to couch their words, use sophistry, and work hard to present part of the story. This is clearly true for both the defendant and the plaintiff legal teams. If we had special health courts, then we could have a nuanced discussion of all the details of patient care. A jury trial leads lawyers to focus on details and try to “make mountains out of mole hills”.

I've tried to engage Dr. Centor in the distant past about what he means by a "special health court", to no avail. Pretty clearly, his concept of the "health court" would be a non-adversarial court system, and would not involve a jury. Perhaps he's thinking of something akin to a coroner's inquest (of the type that does not use a jury), or some sort of inquisitorial tribunal system. One can only guess.

It's not at all clear, though, why he believes such a system could be created and yet be completely non-adversarial. It's difficult to imagine a doctor, accused of malpractice, beaming with delight at the thought of having his case tried in a "health court" as opposed to a regular trial court, or being content with lawyers who argue, "We're not actually representing you - our duty is to help the court find the truth, even if that means you're found to have been culpably negligent." All you have to do is look at the effort that doctors and the insurance industry have invested in keeping confidential the results of peer review in malpractice cases to recognize that the medical profession is not interested in placing all of the facts on the table.

We presently have trials that don't involve juries - bench trials - and although the conduct of the trial can be affected by the absence of a jury, even in medical malpractice cases the litigation remains adversarial. There are pro's and con's to the adversarial system, certainly, but on the whole parties like to be represented by advocates who zealously represent their interests.

Dr. Centor, himself, highlights a significant flaw with his apparent notion of a "health court", in that no "health court judge" or tribunal will be expert in every area of medicine:

Some physicians will testify in cases about which they really understand little. Reading the depositions of some other physicians saddened me.

I will continue my personal philosophy of only accepting to testify in malpractice cases for which I believe I have clear expertise. Over the years I have accepted less than 10% of offered cases. I had testified once previously approximately 25 years ago, and had been deposed once in another case. But generally, I avoid malpractice cases because I do not consider myself qualified.

If you have judges, even specially trained judges, presiding over a trial where the proposed medical experts are testifying outside of their area of expertise, how is that an improvement over the current system? The judges can't be assumed to have a better understanding of medicine than the experts testifying in court, and Dr. Centor argues that many of those experts aren't qualified. If litigants seek out Dr. Centor due to his credentials and expertise, yet he deems himself qualified to serve as an expert in only 10% of those cases, by Dr. Centor's measure what are the odds that a randomly selected health court judge is going to be qualified to hear an assigned case?

For all of the kvetching, every comprehensive effort to review the outcome of medical malpractice cases suggests the same thing: Malpractice lawyers are very selective about the cases they take, when they take cases that turn out to be weak it's almost always because they lack the information necessary to fully assess the case and cannot get that information without filing a lawsuit, when there's ambiguity in a case juries tend to side with doctors, and to the extent that error occurs it usually favors the doctors. As is quite typical, even when arguing that the case shows a "need" for a health court, Dr. Centor argues that the jury came to the correct verdict. His concession reduces his argument to this: "The system worked. so let's replace it with something I can't define that I think will be more fair."

I'm not going to dispute this:

he psychological impact of these charges on the defendants was palpable. These hard working, conscientious defendants had years of having these charges hanging over their heads. They did nothing wrong. That really does not matter in jury trial.

The distinction between professional negligence litigation and standard negligence litigation is that somebody is pointing their finger at you and claiming, "You weren't competent in this case, and your incompetence caused somebody to suffer an injury." One of my law school professors liked to edify his students by explaining legal practice in very blunt terms. One of his declarations was, "You will all commit malpractice." The fact is, everybody makes mistakes - the big question being, how you respond when you make a mistake. Most mistakes can be fixed and, if you detect your error or omission quickly enough, harm can be minimized or avoided.

When you look at why patients look for malpractice lawyers or bring malpractice lawsuits, you find that bedside manner is a huge factor. When something went wrong, was the doctor helpful? If the doctor made a mistake, did he apologize? Rick Boothman, chief risk officer for the University of Michigan Health System, has advocated for years that doctors and hospitals change their approach to litigation, and has documented that an approach of disclosure, apology and cooperation reduces the number and cost of malpractice claims. No need to reinvent the system. It's an approach more institutions and doctors should take.

A comment on Dr. Centor's blog suggests, as an argument for "health courts", "Attorneys will drag out a weak case in hopes of a settlement getting something instead of nothing." The commenter confuses the exception with the rule. The principal reason that malpractice litigation drags on as long as it does is not due to plaintiff's lawyers. It's due to the successful lobbying by the medical malpractice insurance industry for measures that increase the cost of litigation for a plaintiff and prolong the litigation process. By imposing up-front costs and delays, small but meritorious malpractice cases are squeezed out of the system. The longer a case drags on, the more likely it is that a seriously injured malpractice victim will settle for less than the case is worth. As Mr. Boothman indicates, plaintiff's lawyers are happy to work collaboratively with a doctor or hospital to arrive at an early settlement. No plaintiff's attorney wants to invest $50,000 to $100,000 or more in taking a case to the point of trial (and yes, malpractice litigation is extremely expensive) if they can settle it quickly. The exceptional cases involve the late disclosure by the defendant of information that undermines the plaintiff's case, where the plaintiff's lawyer then angles for a modest settlement to try to avoid taking a loss on the case, or where the plaintiff's lawyer isn't competent to litigate malpractice cases in the first place.

A last point on "health courts": Let's assume an efficient health court system that accurately distinguishes actual malpractice cases from maloccurrence that results from non-culpable negligence, outside factors or bad luck. I very much doubt that health insurance companies would support the implementation of such a health court system. Why? Because right now, only a very small percentage of valid medical malpractice cases are prosecuted. The estimate is usually around 12%. The rest of the cases involve patients whose cases are too small to litigate under the present system, patients who lack the capacity or understanding to pursue a malpractice cases, patients who dread the thought of litigation and, perhaps most importantly, patients who like their doctors. If you create a sufficiently painless system, with efficient, low-cost resolution of malpractice claims, inspiring a significant percentage of that majority to pursue their valid claims, the amount paid out to settle claims could increase substantially. Even if Dr. Centor believed that such a system would be better than the status quo, the malpractice insurance industry would fight its implementation, tooth and nail.

Yes, Yes, Becoming an M.D. Involves Traveling Down a Long, Expensive Road

Still, I would feel more sympathy for this guy if he hadn't forgotten to tell us his starting salary when he completed his residency and got his first gig at full pay.

First, I was 32 when I began training and I now had over $230,000 in debt. Had I invested my talents in other pursuits such as law school, I would not have built up this level of debt.

True, but you also might not have a job. So there you go.

Here's the thing: If your first job as a full-fledged M.D. pays, say, $250,000.00 per year,¹ you can live very comfortably while paying off your entire student debt load in five or six years. If you're already used to surviving on the "salary of $39,000" that you earned as a resident, even with that type of rapid pay-down it should be a very comfortable transition.

Also, as I did not start saving when I was younger, financially speaking, I have lost the past 10 years without the ability to save and invest to earn compounding interest.

You traded one type of investment for another, and ended up in a career that (I hope) you love. Do you have any regrets?

In addition, as physicians, though we make more money than many others, we are not reimbursed for many of the services that we provide.

That could mean a lot of things, but I suspect that he's saying that when you agree to accept insurance you're often going to end up being paid by a scheme other than straight fee-for-service, such as a D.R.G., and thus you may not (technically) be paid for the full scope of services you provide to a specific patient because you've agreed to accept a specific fee for any treatment that falls within the D.R.G. That's not the same thing as going unpaid, and obviously you think it's a good deal on the whole because you continue to accept insurance and continue to make a large salary. Most businesses could only look with envy upon such a definition of "not reimbursed".

I want to make it clear that this letter is not just another story about the difficulties of becoming a doctor and being successful in medicine. I do not want you to think I am complaining about how hard my life is and used to be. In fact, I love my job and there is no other field I would ever imagine myself doing.

In other words, on the whole you got a very good deal for your investment of time and money.

My true wish is to illustrate the sacrifices doctors do make because I feel we are not represented when laws are made. These sacrifices include a lack of quality family time....

That's going to vary with specialty. There are highly paid specialties with regular office hours, for those who choose that path. Some doctors choose to become administrators. Some choose lower-paid specialties that allow them to spend lots of time with their families. These are the choices we make.

Let's be clear here, other well-paid professions have the same or greater demands. The lawyers you complain about may be working 80 hours per week, and virtually all of them make less money than you did on your first day of full-fledged practice. Some accountants can barely come up for air during tax season.

Yes, it would be ideal if everybody could earn a massive paycheck without their work ever impinging upon family time, but if you look around you'll find that a great many people sacrifice family time for their jobs while collecting a pretty meager wage. Next time you stop by a 24-hour big box store, grocery store, pharmacy or gas station at midnight, ask yourself - how many people working at that store have families?

...our large student loan debt...

Large, but easily manageable. Many other graduates with high debt loads would find your position enviable - and with cause.

...the age at which we can practically start saving for retirement...

Median household income in Michigan is around $50K per year. Typical compensation for a gastroenterologist is about $330K per year. So in the space of six or seven years, you'll earn roughly the same amount as a pretty typical U.S. family will earn over a career, perhaps more. So tell me again, how hard it is to save for retirement.

...and the pressure we face with lawyers watching every move we make.

Sorry... I'll try to avert my eyes next time.

No, seriously, I recognize that nobody likes to be accused of malpractice, and acknowledge that doctors feel some pressure from the fact that they can be investigated and sued for malpractice if things go terribly wrong for one of their patients, but what does that have to do with the cost of a medical school education? Besides, bringing malpractice into the picture belies your prior argument that doctors "are not represented when laws are made" - states have for the most part bent over backwards to create legal environments in which it's exceptionally difficult and costly to pursue malpractice litigation, and where damages are artificially capped even when it's beyond dispute that a patient has suffered catastrophic injury from the most egregious malpractice. What more do you want?²

I'm not going to argue with you, that the cost of obtaining a medical degree is high, and that there are significant burdens on those who enter the medical field. You want the public to subsidize medical schools and residencies, so that you graduate with a lower debt load and, after your initial medical education, have a more comfortable lifestyle? I'm listening - if we give you that, what are you offering in return? How about we reduce compensation for medical care to an amount more in line with the amounts paid by the rest of the world? Do we have a deal?
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1. That's on the low side for a gastroenterologist.

2. The implied answer is "absolute immunity". One of the things that "tort reform" advocates gloss over is that with low "pain and suffering" caps on malpractice verdicts, the big exposure is for economic damages - largely future medical care. One of the reasons our malpractice costs are higher than the costs in nations with comprehensive national health insurance is that a national health plan will cover much, sometimes all, of that future cost. I would happily take the trade.

The Elderly Cannot Be Informed Consumers of their Most Expensive Care

I am not sure how I came to the page, but in going through the proliferation of articles I had opened in my browser with the intention of "getting to this later", I found "Saving Medicare from Itself" written in mid-2011 by Avik Roy of the Manhattan Institute. For the most part the article simply rehashes the conventional wisdom about Medicare - if costs continue to significantly outstrip inflation, the program cannot be sustained.

Given that Roy started out by, in effect, preaching to the choir, he had what should have been a relatively simple task. Use the available facts and data to point to possible solutions to the problem of healthcare inflation. I know that some argue that the problem of healthcare inflation is going to cure itself - that the changes that led to the rise in costs reflect the significant evolution of the industry and, as we exit the era of new blockbuster drugs and improvements in medical technology become more incremental, inflation will tame itself. But history is a better teacher than wishful thinking - or as Burgess Meredith put it... - we have to plan as if healthcare inflation will continue to rise. And you know what? If we find ways to make healthcare significantly more affordable without compromising quality, even if the cost curve cures itself we'll be much better off as a society.

If Roy believes his own thesis, then one of his arguments should be, "We should look at how other industrialized nations are able to offer a comparable quality of care, with comparable outcomes, at a much lower cost, and at least think about doing what they're doing." Alas, Roy is not so much interested in advancing good policy as he is in advancing the agenda of reducing the scope of Medicare.

Roy argues,

The largest driver of Medicare cost inflation is the fact that retirees bear little of the expense for their own care. As a result, seniors have no incentive to avoid unnecessary or overpriced treatments. Rettenmaier and Saving have shown that, between 1960 and 1985, growth in health expenditures was highest in those categories of spending in which consumer cost-sharing was lowest (such as hospital care), and lowest where consumers were most responsible for their own expenses (like prescription drugs, which were not covered by Medicare during that period).

If that actually were the cost, you should see a different rate of medical inflation for non-elderly populations. You should see yet another, much lower rate of medical inflation for procedures that normally fall outside of insurance coverage. And you should see a much higher rate of inflation in industrialized nations that offer universal or near-universal healthcare coverage. But... you don't.

Roy overlooks the fact that people are inevitably going to be poor consumers of healthcare services. They like their doctor, so they keep going back to their doctor - and while the relationship will benefit many patients, others will keep going back to a doctor who is providing substandard care or who is opportunistically ordering unnecessary tests and procedures, perhaps through self-referral, in order to maximize his revenues. How does Roy suggest that the average elderly person determine whether the doctor she trusts is providing sufficient care, or if a different doctor might offer equivalent care at a lower price or better care at a higher price that nonetheless results in a net savings?

But more than that, where does Roy imagine that the savings will come from? If we're talking about seniors with chronic health conditions, they are going to need diabetes supplies, oxygen, catheters and the like. No way around it. Does Roy believe that individuals can get better pricing on care, supplies and services than an insurance company or government agency that can negotiate a discount? If so, I would like to see him connect that theory to the reality in this country, where the uninsured pay the highest prices for their medical care. If I were to be less charitable, I might ask whether Roy's intention is that the elderly have to choose the care, medication and equipment they need, versus paying their bills, buying food....

One has to ask if Roy's goal is to bend the cost curve, or if it's simply to shift medical costs from Medicare onto elderly individuals. If we presuppose that the elderly can afford the care that they require, it remains fair to observe that a cost shift does not actually address either the cost of the healthcare system or healthcare inflation. It simply means that instead of the money coming from Medicare, it will come from a senior's savings. Or their children's savings. Because unless the goal is deprivation, the money has to come from somewhere.

The problem with Roy's argument actually goes much deeper, when you consider the times when the elderly can easily run up five and six figure medical bills. A senior falls and fractures her hip. A senior has a heart attack or stroke. A senior collapses and is diagnosed with acute kidney failure. They can be in a hospital with a five figure medical bill before they're even able to consider whether they're in the most appropriate care center with the most appropriate doctor and most appropriate treatment plan. When you suffer a catastrophic health issue, odds are you are going to have to rely upon some combination of serendipity and the good intentions of others to get you to a point of medical stability - Roy's conceit that it is possible to address this type of issue by giving seniors an incentive to shop around for the best deal isn't realistic.

Roy complains that the same general problem holds true across the board:

The same holds true for all consumers of health care — not just the elderly. Medicaid and the system of employer-based health insurance both provide a great deal of first-dollar insurance coverage, meaning that consumers do not pay directly for services they receive and therefore have no clear sense of relative costs and values. In 1960, individuals paid directly for 52% of national health expenditures, but by 2008 that share had declined to just 12%. Americans are shielded from the real costs of their health care; as a result, it costs too much.

Except here's the thing: Insurance companies have been experimenting with copayments and deductibles to try to save money. And that cost-shifting has been relatively successful. However, on the whole, the net cost to the consumer has gone up. Why? Because when you have comprehensive insurance and your doctor says, "You need a CT scan", somebody from the medical center calls up your insurance company to see if it's covered. If the answer is "No," the patient is likely to receive a less expensive test that is covered by insurance. On the other hand, if the patient does not have that invisible intermediary, there's nobody to come back with, "Why not start with an ultrasound (or other test that might either confirm or refute a potential diagnosis) and we can see if the CT remains necessary once we have the results." They simply hear their doctor saying, "You need this," and so they pay for it.

Which brings to mind another contributing factor: the doctor may not have any idea what the tests, procedures, and medications he orders cost. In fact, there's a large, lucrative industry built around trying to convince doctors to prescribe expensive, patented medications, or to use new medical technologies, implants and devices. Perhaps that would be mitigated in part if more patients were overtly cost conscious, but I doubt it - it's not realistic for doctors to keep track of the relative cost of myriad treatment options, and to try to guide patients through their choices - particularly at those times when the most expensive care decisions are being made. Even if we assume that the information is available, accurate and that the patient is capable of understanding the financial information. It's simply not realistic.

Note that Roy also assumes that the fact that "In 1960, individuals paid directly for 52% of national health expenditures" while now "but by 2008 that share had declined to just 12%" means that people are choosing to obtain care that the don't actually require. A big part of the difference comes directly from Medicare - a program that was created in no small part because the elderly were being underserved by the health insurance market. We also now diagnose and treat a wide range of chronic health issues that were barely on the radar screen, or even unknown to medicine, back in 1960. We also offer a wide range of medical treatments that significantly improve the quality of life that were in their infancy or largely unavailable in 1960. A big part of the difference comes from the fact that, as a society, we have decided that certain medical care should be provided to people even when they cannot afford to pay a cent toward that care - hence programs like Medicaid and laws like EMTALA.

Roy makes little effort to advance his position that healthcare costs would decline if consumers were required to pay for a greater percentage of their care, and as I noted the data suggests that costs could actually increase. Roy does not attempt to document that the care is unnecessary, or the mercenary argument that if we apply a cost-benefit analysis we as a society will be better off even if we deny people access to necessary medical care.

At the end of his article, Roy reveals himself to be little but a foot soldier for the Romney/Ryan "reform" plan - not a policy analyst, but a political advocate. His first recommendation is right out of the political coward's playbook - "Don't change anything for anybody aged 55 or older." That's not about making good policy or protecting people - it's about votes. If in fact his second proposal, cost sharing (i.e., increasing what people have to pay for the care they receive) leads people to "make sensible decisions about whether to pursue treatment", it will do so for somebody who is presently 55 or older. If in fact his third proposal, means testing, is a reasonable measure, there's no reason to exempt the present generation of wealthy Medicare recipients from that standard. Worse, cost-sharing is unlikely to work, and means testing is not likely to produce appreciable savings.

Roy's next proposal is to "index the Medicare retirement age to life expectancy", that is, to make people wait longer to qualify for Medicare. Never mind that a significant population of seniors already postpone medical treatment until they qualify for Medicare. Never mind that the cost of postponed treatment can mean that the overall cost of Medicare goes up, or that more people will end up either on Medicaid, or become eligible for Medicare through SSDI instead of through reaching the retirement age. If there is a valid argument that actual savings could be realized, Roy hasn't tried to make it, relying instead upon supposition.

Roy's first meaningful proposal is to work harder to eliminate fraud from Medicare. Except everybody wants to eliminate fraud. Doctors and clinics get sued and prosecuted for Medicare fraud. Roy's solution? To privatize administration of Medicare. He may as well argue that we should wave a magic wand. There is no reason to believe that privatized administration will reduce fraud, and every reason to anticipate that it will increase costs.

Roy's ultimate proposal is that we implement a Ryan-style voucher plan for Medicare, while allowing seniors to buy insurance through a health insurance exchange. You know, the sort of exchange that's "the end of the world" as part of the PPACA, but for some reason is the height of market efficiency for a post-Medicare voucher program for the elderly.

Roy closes by attempting to put Medicare "in context":

Addressing this problem would require reforming and integrating Medicare, Medicaid, the employer-sponsored system, and the individual market (and would therefore require replacing Obamacare with a very different set of health-care reforms well beyond Medicare). It would involve addressing the runaway costs of defensive medicine and medical-malpractice litigation. Such changes would of course be extremely difficult to undertake, as the heated ongoing health-care debate amply demonstrates.

Roy wants to "integrat[e] Medicare, Medicaid, the employer-sponsored system, and the individual market"? That sounds a lot like what would be accomplished through "single payer". So no, that's actually not what Roy wants. Were Roy and his brand of analyst serious about reform they would be looking around the world at how other industrialized nations have responded to the same issues and proposing that we emulate their success. Instead they urge us to ignore our lying eyes, drink the Kool-Aid, and double down on our history of failed market-based (non-)solutions.

Note also Roy's introduction of the canards that "defensive medicine" and medical malpractice play a significant role in the current problem, and his prevarication that they are "runaway costs". They weren't important enough to address in his plan to save Medicare, but how can you close out a political argument like this without dropping them in for good measure? A serious analyst would put the prevention of malpractice and maloccurrence on the agenda, while recognizing that any effort to push the "runaway malpractice costs" like would reveal him as a dilettante. The current system compensated a very small percentage of malpractice victims, and is very accurate at weeding out unsupported claims. There's no indication that so-called "defensive medicine" could be eliminated even if doctors enjoyed absolute immunity - and if you look at the facts even the most sweeping "tort reform" measures, such as the laws in Texas that come close to giving doctors immunity, do not affect the manner in which doctors order tests and procedures. What changes things? The sort of salaried arrangement used by facilities like the Mayo Clinic and the Cleveland Clinic. Go figure.

Strip away the window dressing and the argument boils down to, "Medical care costs too much and costs are rising too quickly. I have no solutions, so I propose eliminating any form of group health insurance, giving poor people vouchers that they can use to pay for individual insurance policies, and calling it a day."

Defensive Medicine and Fear vs. Reality

Robert Samuelson describes the hypothesized fear that some claim causes doctors to prescribe unnecessary (and sometimes potentially harmful) tests to avoid a potential malpractice claim,

The [journal Health Affairs] argues that rapid growth [in health spending] was driven partly by powerful non-medical forces: Demanding patients insisted on scans; doctors feared malpractice suits if they refused; and doctors and hospitals wanted to maximize revenues. What explains slower growth is that these incentives weakened....

One change was the adoption of prior authorization by many private insurers. Doctors usually had to get permission for advanced imaging and, if patients’ conditions didn’t comply with guidelines, explain why. This may have discouraged referrals, because doctors don’t like being overruled. Patients also became less demanding, because deductibles and co-payments rose.

Yet despite less of this expensive testing in cases where it's not needed or where the need is borderline, there has been no increase in malpractice litigation. To the contrary, the number of malpractice lawsuits continues to drop.

The leading problem with the argument that unnecessary imaging studies were driven by fear of malpractice litigation is that a doctor can only be held liable for malpractice if he violates the governing standard of medical care - a standard defined by doctors, not by lawyers. The conceit is that the additional test might reveal something that did not show up in prior tests, saving the doctor from a "failure to diagnose" claim, but even without the test if the doctor established that he adhered to the governing standard of care the claim would not succeed.

Under the former model implied by Samuelson, the doctor meets with the patient, the doctor either says "This really expensive imaging study is unnecessary and won't help me diagnose your problem," or makes a statement he knows to be misleading, "We need this really expensive test to verify your diagnosis", the patient responds, "I want it anyway", and the doctor goes along with the patient's request.

The first explanation offered for the drop in testing, that insurance companies became more likely to require prior approval and "doctors don’t like being overruled" undermines the notion that fear of malpractice litigation is a significant factor. It is difficult to believe that a doctor who is willing to order medically unnecessary tests on large numbers of patients in order to avoid the tiny chance that one will later file a frivolous lawsuit against him is going to have such a dramatic change of heart, "I'm not even going to mention the additional test because the patient might want it, and then the insurance company might say 'no'."

Further, Samuelson informs us, "Data from one insurance group suggested that about half the MRI slowdown involved lower back, elbow and knee pain." (The article Samuelson references also mentions low-value MRI's of the pelvis.) Lower back pain can be associated with serious medical conditions, but the study distinguishes MRI's "used to diagnose lower back pain" from those ordered when a patient is "considering surgery or physicians strongly suspected systemic disease". But leaving the lower back aside, it's difficult to believe that doctors are ordering large numbers of knee and elbow MRI's as "defensive medicine".

More than that, its unlikely that the doctor is going to know what any given insurance company will or will not approve before his office checks the policy terms and, if necessary, makes the request. It's even less likely that it will be the doctor making the call. Why would a doctor fret if an insurance company says "no" to one of his clerical staff? If the doctor believes that the test is medically necessary, he is likely to fight the insurance company. I've dealt with medical clinics who have a full-time employee whose only job is to push back against insurance companies' efforts to deny or limit care.

The second explanation, speculation that "Patients also became less demanding", seems like a big stretch. If a test is medically necessary, the doctor is going to push the patient to get the test despite the out-of-pocket cost. If your doctor tells you, "You need a $5,000 medical test in order for me to diagnose your condition," even if you're one of the "27 percent" of "workers with deductibles exceeding $1,000", odds are you're going to bite the bullet. Odds are you'll be billed after-the-fact, and you only pay a deductible once. If you're looking at very expensive medical testing odds are that you have an underlying medical condition that is going to take you across that line, anyway.

The concept of "defensive medicine" Samuelson implies would also presuppose a highly informed patient. They see the doctor for diagnosis and treatment. The doctor provides care he believes is appropriate. They then ask, "Shouldn't we also use the [specific expensive medical test or imaging study]?" The reality is, confronted with a non-specific diagnosis or statement by the doctor about a low-probability but high consequence possibility in a differential diagnosis, the patient is likely to ask, "Isn't there anything else we can do," with the doctor identifying the additional test that could be performed.

It's difficult to see how the "defensive medicine" line would have changed. It's unlikely that the doctor who is inclined to order unnecessary testing is fretting, "Oh no, if I mention the test there's a one in four chance that they have a high copay and they might refuse it," or "Oh no, if I mention the test they may have insurance that requires pre-authorization and the request may be denied." If they don't mention the test to the patient they're right where they would be without "practicing defensive medicine" - they can still be accused of not mentioning or ordering the test. If they recommend the test and don't push the patient to fight an insurance company denial or to pay the copay, they are similarly exposed.

If the assumption is that certain doctors will liberally prescribe medically unnecessary tests only if they don't expect to encounter friction - only if they expect an insurance approval, and only if they believe that the patient's contribution to the cost of the test will both be known to the patient in advance and not scare off the patient - then "defensive medicine" really translates into, "I'll order whatever testing I think the insurance company will pay for." There's a madness to that method, as there's always one more test you could order and, frankly, the patients with the best insurance likely fall within the population that is least likely to sue.

It could be hypothesized that the economic changes have forced a learning process on the part of doctors - that frivolous malpractice lawsuits are so rare, ordering unnecessary medical testing has no meaningful impact on whether or not any given doctor gets sued. But then, as Samuelson notes, there's the elephant in the room:

Finally, some reimbursement rates fell. In 2005, Congress mandated that Medicare couldn’t pay free-standing imaging centers — often owned by doctors — more than it paid hospitals for outpatient imaging. This “reduced profits for imaging centers and resulted in extensive consolidation in the industry,” the study said. Under complex reimbursement rules, doctors had incentives to establish imaging centers or install scanning devices in their offices, says Levy. And these imaging centers seemed “particularly active in stimulating demand.”

That is, it appears that the leading cause of unnecessary medical imaging, performed at the highest cost, was physician self-referral - sending patients to receive tests at centers owned in whole or in part by the doctor making the referral, with the referring doctor having both the need to keep his imaging center busy and receiving a share of its profits. No, I'm not going to argue that this was a standard practice across the board, and even within the context of self-referral I'll give the majority of doctors the benefit of the doubt, that they referred patients to their own clinics for tests they would have ordered anyway - the difference being much more one of where the test is performed than whether it is ordered. But self-referral has long been identified as one of the leading causes of unnecessary medical testing, a genuine, documented cause of medical inflation.

It is easy to understand why a doctor does not want to be accused of malpractice under any circumstances, and why a doctor would want to avoid being sued even in a context in which he will easily defeat the suit in the early stages of litigation. People who argue that "defensive medicine" plays a large role in the cost of medicine ignore the fact that to the extent that "defensive medicine" exists, it is largely driven by emotion. Were "defensive medicine" is driven by facts, you would expect to see a reduction in low-value medical testing when the rate of malpractice lawsuits drops. Yet the prevalence of low-value testing and the cost of medical care is not correlated to the number of malpractice lawsuits. If doctors believed that certain expensive tests were necessary to avoid potential lawsuits, even if not medically necessary, you would see them pushing patients to pay for the tests and fighting insurance companies to gain approval. Instead you see them deferring to insurance companies or, it would seem, not even mentioning to patients tests that might stretch the patients' pocketbooks.

What you do see through studies such as the one Samuelson describes is that you can reduce the number of low-value tests across the board by changing the economic environment for such testing. That is, whether referrals for low-value testing are driven by a strong desire to diagnose a tricky condition, self-referral and profiteering, or "defensive medicine", there appears to be an across-the-board reduction in the number of such referrals when you change how you compensate doctors for the tests and the amount that patients must contribute in order to obtain the low-value test. Rates of malpractice litigation, damages caps and the like don't matter.

As long as any malpractice lawsuits are allowed, you're going to see doctors express that they fear frivolous lawsuits. History tells us that, short of a grant of absolute immunity, changing the tort system won't affect how doctors practice medicine. (The prior, ugly history of when doctors were all-but-immune from malpractice litigation should not be forgotten.) But, to the extent that defensive medicine even exists, if you can eliminate most or all "defensive medicine" by adjusting financial incentives, it's a peripheral issue - something that can be successfully addressed through indirect, economic reforms. Given that despite years of debate, there's still no consistent definition for or objective measure of what constitutes "defensive medicine", and "tort reform" has had no impact on its supposed practice, focusing on economics seems like the way to go.

Medical Malpractice Tort Reform and Federalism

Following up on some Volokh Conspiracy posts about the relationship between tort reform and federalism, Jonathan Adler quotes Walter Olson on the subject. Olson suggests that there is

a very real difference between areas like product liability and nationwide class actions—in which suits ordinarily cross state lines, and the majority of runaway verdicts are against out-of-state defendants—and more conventional kinds of tort litigation arising from car crashes, slip-and-falls, and medical misadventure, where cases are mostly filed against locally present defendants. As a rough rule of thumb, it’s worth presuming that most of the local suits do not externalize heavy costs across state lines and should accordingly be left alone by Congress unless it is itself vindicating some constitutional right or coordinating the functioning of some constitutionally authorized federal government activity.

Adler extrapolates,

Olson is anything but an opponent of tort reform generally. Indeed, he’s been one of the litigation explosion’s most prominent critics. But he recognizes that support of a particular policy goal does not require abandoning a principled commitment to the broader federalist scheme.

I'll take Olson's comments at face value, but let's recognize that not all insurance companies or medical industry lobbies want federal "tort reform". This battle has already been mostly won at the local level. It's difficult to conceive of a federal "reform" that would so heavily favor industry as to preempt state laws and caps that are less restrictive than the federal standard while allowing states to set more stringent standards and lower caps. Which is to say that states like Texas, that have all-but-eliminated medical malpractice as a viable tort, would likely see a federal reform reduce the burdens and hurdles they have placed in front of plaintiffs.

Further, part of the reason for local success is that it has become relatively cheap and easy to influence state legislatures and appellate courts, with insurance companies pouring millions into state supreme court races with the intention of electing judges favorable to their positions on such issues as tort reform. Following them Ohio Supreme Court's rejection of damages caps in malpractice case, the insurance and medical industries worked hard to change the composition of the court - not to change the law or state constitution, but to change the judges who interpreted and applied the laws and constitution - with the result that a reconstituted state supreme court found damages caps to be permissible.

If you federalize restrictions on medical malpractice cases you change that context significantly. Suddenly a single example or case can be used to propel a national public relations campaign to make the system more fair - and if you're honest about the impact of tort reform you know that's the opposite of what the insurance companies want. Reforms that increase the cost of litigation for plaintiffs but do little to nothing to improve the integrity of the system, such as requiring "certificates of merit" in association with the filing of a malpractice suit, might be challenged. Low, one-size-fits-all caps on "pain and suffering" damages might be revealed as absurdly low for certain severely injured patients - as they are. Caps would likely also be indexed to inflation, rather than remaining subject to a rigid, unchanging cap for years or decades.

In implementing tort reform, it is conceivable that Congress would do a better job than most states in creating a fair and balanced system. That isn't going to be reassuring to the insurance industry, so we can't be particularly surprised if national tort reform advocates find sudden value in federalism - you don't bite the hand that feeds you. Why, despite an express willingness to include tort reform in the Health Care Reform Act, did the issue all-but-drop off the radar in the otherwise contentious debate over the bill? In my opinion, because federalizing the issue is no longer a priority, and for the reasons I just provided may in fact be viewed as a negative, by a healthy proportion of health and insurance industry lobbyists.

Balancing the Budget - The Home Game

When I followed a link to the NYTimes "you fix the budget" gimmick, I was disappointed. Not that I expected it to be a realistic exercise, but it was so full of forced and often false choices that I rolled my eyes and left the page. It's like one of those telephone opinion polls when they ask, "If you had this partial piece of information, would it make you more or less likely to vote for candidate X" - If you can believe it, they actually want you to answer "More" or "Less" instead of "Yes".

By way of example, how will cutting earmarks in fact cut the budget, when they relate primarily to how money is to be spent, not whether it will be spent? And Putting the canard of "malpractice reform" right at the top of the list for health care reform, of course, sends entirely the wrong signal about the usefulness of the exercise to anybody who knows a whit about malpractice litigation (as opposed to having internalized insurance industry propaganda). What about fraud and waste, either of which alone is a much larger cost than the entire cost of malpractice litigation? Also, why not means test Medicare - where is the option for increased copays and deductibles for seniors with substantial means, or even continuing to charge wealthy seniors a premium? Is that seriously too complex a possibility to be factored in? We must tax, cut, but not actually reform? (And those examples barely touch the surface.)

Mythago doesn't post to her blog very often these days but when she does, boy can she get to the point.

What Exactly Is "Defensive Medicine"

A medical resident writes of the rise of what he calls "defensive medicine" in medical practice,

Our predecessors were able to gather essential pieces of clinical data from a physical exam. Today, in the world of overburdened emergency departments, full hospitals, and electronic ordering and note-writing systems, we are forced to spend less and less time with our patients. In an attempt to compensate for this problem, we make up in quantity what we cannot provide in quality – and we make up with money what we cannot provide in time. Although the perception is that patients benefit, by getting a myriad of lab tests and imaging studies, they do not. These tests mean very little unless they are correlated clinically. They only become significant in the setting of the patient.

Rather than realizing this, clinicians have begun to practice test-centered medicine rather than patient-centered medicine. This causes huge delays and expenses in patient care. It also places patient at risk for (1) being treated unnecessarily for incidental findings and (2) being exposed to unnecessary radiation. Furthermore, it alienates patients even further from their physicians – and this, perhaps, is the greatest cause of increased lawsuits and patient dissatisfaction, which starts the cycle of practicing defensive medicine all over again.

The conceit behind "defensive medicine" is that fear of lawyers and litigation compels some doctors to perform unnecessary tests and procedures in order to cover themselves if they misdiagnose a patient. The argument that such a form of "defensive medicine" exists is weak. But if the real problem is that doctors are too rushed, harried and/or unpracticed to take a complete history and perform an effective physical examination, and are using tests as a substitute, that's not something that can be blamed on lawyers.

A Big Part of How Medical Mistakes Become Malpractice Lawsuits

If recovery continues I suspect that this won't turn into a malpractice lawsuit, but the money quote comes at the end:

I notified the administration of the ER of the situation and was told that I would receive a call. No one has called in the past 8 days. An apology would have been nice.

Doctors, read up.

Gingrich & Goodman Idea #8: "Eliminate Junk Lawsuits"

One of the interesting aspects of healthcare reform has been how quiet the insurance industry has been. When you hear people like Newt Gingrich talk, you would think that "tort reform" was perhaps the most pressing issue that must be addressed as part of a reform package. But instead the insurance companies appear happy with the status quo.

If you think about it, the insurance industry has good cause to be happy with the status quo. Despite their squawking about evil "trial lawyers," they have achieved their "tort reform" goals in pretty much every state. They have consistently focused on four goals: limit damages awards, so that the most severely injured individuals recover get little compensation for their pain and suffering; abolish "joint and several damages" and implement the "empty chair defense" to force plaintiff's lawyers to sue every conceivable defendant and drive up the costs of litigation; require notice periods and "certificates of merit" before a lawsuit can be commenced so as to prolong and again drive up the cost of litigation; and shorten statutes of limitations and implement statutes of repose, such that patients have a narrow window of time to make their claims before they're permanently barred from doing so, regardless of a claim's merit.

I read an article recently by a doctor who was sued as part of a malpractice case and who was ultimately dropped from the suit. She asked her defense lawyer "Why was I sued" and the defense lawyer lied, "I don't know." The defense lawyer does know. If you have a system of "joint and several liability", you can sue those you believe are most responsible. If a defendant believes others are in fact responsible, or are more responsible, the defendant can bring those others into the case. Insurance companies have worked very hard to abolish joint and several liability and to create the "empty chair defense" - so that a defendant can point to the "empty chair" where that defendant "should be sitting" and argue at trial that the plaintiff didn't sue the actual culprit, and that the actual culprit is responsible for most or all of the damages. That defense may amount to lies and innuendo, but courtroom arguments won't support a defamation case and the goal is to win, right? So to avoid that outcome the plaintiff now brings every conceivable defendant at the start of the litigation. This pro-insurance industry reform increases the cost and burden of litigation, and measurably harms the health professionals (and others - this isn't limited to malpractice) who are brought into claims to avoid the "empty chair defense". Plaintiff's lawyers would be happy to go back to joint and several liability with the onus on the defendant to bring in a supposedly culpable third party, and that should work out quite well for doctors, but the insurance industry is not going to give up this "reform".

Of the four leading "reforms", arguably the "certificate of merit" should help avoid "junk lawsuits" but in reality malpractice lawyers work hard not to file meritorious claims. Even without that requirement, due to the high cost of litigation, malpractice lawyers pay medical professionals to help them screen their cases - they don't want to waste their time and money on cases they cannot win. The dubious claims get filed because lawyers lack the information necessary to fully assess the merits of the claim without discovery - without forcing that information out of the defendants and their insurance companies. The certificate of merit prepared for such a case is prepared by a doctor who is similarly forced to make assumptions about what happened. So in practice it's a great way to generate revenue for doctors who prepare certificates of merit, drive up the cost of litigation and drag out the settlement process, but does little to ensure that a case is meritorious.

Some realities of medical malpractice litigation:

• Most malpractice cases are correctly decided.


• Those in which are arguably wrongly decided in favor of the plaintiff have smaller-than-average recoveries, and claims without merit are "generally resolved appropriately".


• About one in six malpractice cases are wrongly decided in favor of the doctor.

Further,

the malpractice system performs reasonably well in its function of separating claims without merit from those with merit and compensating the latter. In a sense, our findings lend support to this view: three quarters of the litigation outcomes were concordant with the merits of the claim.

And, when "non-error claims" were made, it was not for a lack of diligence by the plaintiff's lawyers:

The profile of non-error claims we observed does not square with the notion of opportunistic trial lawyers pursuing questionable lawsuits in circumstances in which their chances of winning are reasonable and prospective returns in the event of a win are high. Rather, our findings underscore how difficult it may be for plaintiffs and their attorneys to discern what has happened before the initiation of a claim and the acquisition of knowledge that comes from the investigations, consultation with experts, and sharing of information that litigation triggers.

The most serious problem identified?

Although the number of claims without merit that resulted in compensation was fairly small, the converse form of inaccuracy — claims associated with error and injury that did not result in compensation — was substantially more common. One in six claims involved errors and received no payment. The plaintiffs behind such unrequited claims must shoulder the substantial economic and noneconomic burdens that flow from preventable injury. Moreover, failure to pay claims involving error adds to a larger phenomenon of underpayment generated by the vast number of negligent injuries that never surface as claims.

That's right - not enough people injured by malpractice receive fair compensation for their injuries. All of that information coming from the New England Journal of Medicine.

One of the criticisms of the malpractice system is that too much of the money that goes into the system goes to the cost of litigation, with too little ending up in the pockets of an injured plaintiff. It's a fair criticism. It's also fair to recognize that delay and increased cost are a defense lawyer's friend, and the plaintiff's lawyer's enemy. A dream case for the plaintiff's lawyer would involve calling the defendant's insurance adjuster, negotiating a fair settlement, executing the settlement agreement, and getting a check at the earliest possible date. It almost never happens. Instead, even when liability is blindingly obvious, insurance companies want to make plaintiff's lawyers work for the money, and benefit from prolonging litigation during which time a severely injured plaintiff may decide that they would rather take a small settlement now than have to wait additional months or years to be more fully compensated. Returning to the New England Journal of Medicine:

Frivolous litigation is in the bull's-eye of the current tort-reform efforts of state and federal legislators. The need to constrain the number and costs of frivolous lawsuits is touted as one of the primary justifications for such popular reforms as limits on attorneys' fees, caps on damages, panels for screening claims, and expert precertification requirements. Our findings suggest that moves to curb frivolous litigation, if successful, will have a relatively limited effect on the caseload and costs of litigation. The vast majority of resources go toward resolving and paying claims that involve errors. A higher-value target for reform than discouraging claims that do not belong in the system would be streamlining the processing of claims that do belong.

Plaintiff's lawyers would get on board with that. Why won't Newt Gingrich's clients in the insurance industry?

Frankly, "tort reform" is a subject that a few poeple find interesting, but makes most people's eyes glaze over. That's why the insurance industry and its shills use misleading sound bites "junk lawsuits", "lawsuit lottery", etc., to mischaracterize the facts. (Why don't "tort reform" advocates ever show us the paraplegic in a wheelchair, or the severely brain injured child, who "won" this "lawsuit lottery"?) When there's real scholarship available from credible sources, such as the NEJM article quoted above, it's disgraceful that the mainstream media gives unquestioning coverage to the insurance company spin than they do to the facts, but... that's pretty typical of mainstream media coverage of contentious or scientific issues.

Speaking of shills....

The Newt Gingrich, John C. Goodman editorial is subtitled, "We don't need to study lawsuit reform for one minute longer", so I guess they've read the NEJM article and... yeah, right. They don't want to study lawsuit reform for one minute longer lest some facts enter the debate. It's enough to declare that "The current system is broken" then demand "reforms" that will ensure that even fewer victims of medical malpractice receive any compensation, and fewer of the rest receive fair compensation. And of all states to hold up as an example, Texas - a state that went farther than any other to kowtow to the insurance industry to the significant detriment of victims of malpractice. Tort reform was sold on lines like this: "52 counties in Texas now have no obstetrician. Wide swaths of Texas have no neurosurgeon or orthopedic surgeon". Four years after "tort reform", the number of counties without obstetricians is unchanged--152 counties still have none, according to the Observer's examination of county-by-county data at the state Medical Board... Nearly half of Texas counties--124, or 49 percent--have no obstetrician, neurosurgeon, or orthopedic surgeon. Those specialists aside, 21 Texas counties have no physician of any kind." Let's not forget the New Yorker article, in which a doctor turns a spotlight on high medical costs in Texas:

Some were dubious when I told them that McAllen was the country’s most expensive place for health care. I gave them the spending data from Medicare. In 1992, in the McAllen market, the average cost per Medicare enrollee was $4,891, almost exactly the national average. But since then, year after year, McAllen’s health costs have grown faster than any other market in the country, ultimately soaring by more than ten thousand dollars per person.

“Maybe the service is better here,” the cardiologist suggested. People can be seen faster and get their tests more readily, he said.

Others were skeptical. “I don’t think that explains the costs he’s talking about,” the general surgeon said.

“It’s malpractice,” a family physician who had practiced here for thirty-three years said.

“McAllen is legal hell,” the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere.

That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down?

“Practically to zero,” the cardiologist admitted.

“Come on,” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures.

So Texas-sized "tort reform" left it with one of the highest cost, most wasteful healthcare markets in the nation. And when confronted with that fact doctors still try to blame "malpractice litigation" even though virtually no malpractice suits are filed.

In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.

It must make Newt Gingrich very proud.

All of that said, let me briefly touch on the reasons why I don't think that the insurance companies are eager for the federal government to impose Texas-style "tort reform" upon the nation, and are instead appear largely content with the softer reform measures that exist in both the House and Senate bills. It's not that they're trying to silence their shills, but even Gingrich put "malpractice reform" eighth on his list of "ideas". If you impose a national cap on damages, it's likely to be higher than many state caps - many such caps were imposed decades ago and have not since been raised - and to be indexed to inflation.

Further, it's easier to target Congress with a litany of cases in which a cap brought about an unjust result, both because you're targeting one legislative body instead of fifty and because you're better able to get media attention, potentially having the cap raised in subsequent years. It's hard to make a "conservative" case for a federally imposed statute of limitations for malpractice cases, and you suffer the same consequence - it is easy to find examples of people, particularly people injured as minors, whose claims were cut off by a statute of limitations before they realized the severity or cause of their injury, or before they were legally competent to pursue the claim. A national statute of limitations could significantly expand the number of people able to bring claims currently time-barred under state law. Imposing an abolition of joint and several liability would be hard to disguise as anything but an intrusion on states rights. Further, all of these restrictions would be subject to appeal to the U.S. Supreme Court which, although largely pro-industry, might nonetheless have a difficult time finding a constitutional basis for supporting the federalization of a single type of tort, or reading the 7th Amendment out of the Constitution.

You would also think that a "conservative" like Newt Gingrich would want to empower states - any of which can, right now, emulate Texas - to enjoy the right to fashion their own remedies consistent with their own views of public policy. Surely he's heard of this thing called "federalism"? Instead, as with insurance regulation, he'll apparently support anything his industry sponsors want even if it undermines federalism. Of course, that's no surprise if you look at his track record.

(Return to Parent Article.)

Shining a Dim Light on Healthcare Reform

David Brooks comes not to praise Obama, but to... damn him with faint praise? I expect that some on the right will claim that Brooks' latest reflects a continuing infatuation with Obama, but I think Brooks' history belies the notion of infatuation. If I were wrong, I would expect Brooks to direct happy sunbeams at Obama, the way he did with so much of Bush's (bad) policy. But instead we get the dim glow of an intellectual nightlight.

Speaking of Obama's promise not to raise the deficit as a "Dime Standard", Brooks opines that it "kills off" the House Bill in favor of a less expensive Senate Bill, and as setting "off a political cascade".

Since the Congressional Budget Office is the universally accepted arbiter in such matters, the Democrats have to produce a bill that the C.B.O. says is deficit-neutral, now and forever. That means there will be a seller’s market for any member of Congress, Republican or Democrat, who has a credible amendment to cut costs. It also means the Democrats will have to scale back coverage and subsidy levels to reach the fiscal targets.

Or maybe it means none of that. I recall when CBO's optimistic projections were being used to sell Bush's tax cuts. What happened when the economy tanked, again? Did Brooks call on Bush to issue a mea culpa and restore prior tax levels? Hardly. This is Brooks applying his usual double standard, albeit in a less obvious manner than Gerson: it's only Democrats who have to keep their promises, and only Democrats who have to strive for fiscal sanity.

Nothing's wrong with advocating fiscal sanity. But in my opinion, if you wish to be taken seriously on the issue, you have to apply the same standard to both parties' tax and spending policies.

What's likely is that the CBO will project an optimistic and pessimistic ten year projection, paving a path for the passage of any bill that (by whatever math is being used) falls somewhere between the two extremes. As so many aspects of healthcare reform aren't quantifiable, tremendous heat may later be directed at the question of whether or not healthcare reform was deficit-neutral, but nobody will be able to provide an accurate, meaningful balance sheet. Also, this year's bill isn't next year's budget. If Congress decides next year to increase subsidies, that doesn't mean that this bill isn't revenue neutral. If it sounds like I'm describing a big game, well, yeah. I'm just surprised Brooks doesn't yet understand (or pretends not to understand) how the game is played.

Brooks continues by describing how Obama has endorsed a "backdoor and indirect version of the cap" on the tax exemption on employer-provided health benefits, and thus in his view has "no principled argument to reject" a direct cap. You know what? If that's what Congress passes, I wouldn't expect Obama to even try to reject the explicit cap. And if the Republicans want to advance a clear-cut tax increase on the middle class in advance of next year's midterm elections, I applaud their courage for being honest about the effect of a cap. So which Republican wants to sign up first?

Brooks provides some standard tropes on tort reform:

Third, the president accepted the principle of tort reform to reduce the costs of defensive medicine. Once again, the specific proposal Obama mentioned is trivial. The important thing was the concession on principle. There are already amendments being drawn up to create separate malpractice courts and to otherwise reform the insane malpractice system. The president is going to have a hard time rejecting these amendments just because they might reduce campaign donations from tort lawyers to the Democratic National Committee.

I keep forgetting the number of states in which evil trial lawyers have successfully battled back tort reform. Is it... zero? Yeah, that sounds about right. Also, Earth to David Brooks, most tort lawyers don't practice in the area of medical malpractice - that's a boutique practice, made even more so by tort reform efforts to date that have massively increased the cost and complexity of litigating a malpractice case.

But more to the point, while it's easy to repeat "tort reform" propaganda about the legal system (the worst sin of which, at least according to this NEJM study, is it's frequent wrongful denial of compensation to genuinely injured plaintiffs), there are a couple of things to consider. First, nobody is really riding the "tort reform" horse at this time. While Brooks is the first to abandon the CBO as a "gold standard" when its findings contradict his platitudes, malpractice spending (including, of course, the bulk of that spending - the cost of the defense against valid claims and of paying the victims of those claims) is less than 2% of healthcare costs.

If Brooks would defer to the CBO's projections on how money much various "reforms" would save, my guess is that most would be revenue-neutral (tort reform, even as sweeping as the near-immunity granted in Texas and Florida) has had no apparent effect on healthcare costs or inflation) to increasing the cost. Even if we assume that "defensive medicine" exists, there is no evidence that even the most sweeping "tort reform" measures will limit its "practice". The CBO has "found no statistically significant difference in per capita health care spending between states with and without limits on malpractice torts".

Further the CBO finds no relationship between so-called "defensive medicine" and healthcare inflation:

Other factors such as defensive medicine (which refers to medical tests or procedures of little or no clinical value that are ordered by physicians primarily to avoid lawsuits) and physician-induced demand (which refers to spending that is brought about at least in part by providers’ desire to augment their own income) do not appear to explain a significant part of the growth in spending, according to published analyses

It's not clear what Brooks envisions in terms of "separate malpractice courts", or how he thinks their creation will affect anything about the present tort system. Like other "tort reform" advocates who bandy about similar ideas (such as "health courts"), the specifics are always lacking.

Brooks next states that, by suggesting that he'll pass a bill that has effective reform even if it does not include a public option, the President has killed off the possibility of a public option. In fact, what he did was make clear that he will sign a healthcare reform bill that does not include a public option, if that's all that the Senate will give him. Sure, some would have preferred that he express that he would veto a bill without a public option (including some on the right who would want to see him set himself up for failure), and it's likely that any sort of public option that gets through would be implemented only if certain triggers are met. But unless Brooks knows of some way that a President's speech could have magically won him a filibuster-proof majority in the Senate to back a pubic option, Obama was acknowledging political reality, not creating it.

Brooks then talks about Presidential support for "game changers" without really being clear on what he has in mind. Brooks takes umbrage at this suggestion,

Since health care represents one-sixth of our economy, I believe it makes more sense to build on what works and fix what doesn't, rather than try to build an entirely new system from scratch.

grumbling,

The only risible parts of the speech came when Obama said that parts of the system work (they don’t; they’re unsustainable) and when he said he would be the last president to take on health care (we still await a president willing to take on fundamental perversities in the system).

Is Brooks serious? He thinks that there are no parts of the present system that work? I would love to read his series of editorials explaining how he would tear the system down and rebuild something entirely new, while convincing the nation's people, doctors and hospitals to obligingly trust his better judgment. But if anybody's accused Obama of arrogance, following any such series they'll have nothing on Brooks. Seriously, Brooks expected that Obama could go before the nation and state, "All proposals to date are too modest, nothing works, and so we're going to tear down the system," and have any chance of subsequently getting any sort of reform bill passed?

Also, Obama didn't say "he would be the last president to take on health care". He said "I am determined to be the last". If Obama believes he can or will be the last, that's risible. But he was actually describing his level of determination, not his actual expectations. Rhetorical excess? Sure. But hardly what Brooks pretends.

I think it's a fair criticism to state that Obama "has decided to expand the current system, not fix it." But that's because he lives in the real world, and is addressing the political realities of our system of government. Alas, David, sometimes even a capable President cannot make the pie higher.

Medical Malpractice Lobbying

I've observed previously that people who editorialize on the subject of healthcare and malpractice often have a hidden agenda, working, consulting or lobbying for healthcare interests. So you would think it would be a breath of fresh air to have the Washington Post give a column to a guy who decries the role of lobbyists:

Yet the congressional leadership has slammed the door on solutions to the one driver of waste that is relatively easy to fix: the erratic, expensive and time-consuming jury-by-jury malpractice system. Pilot projects could test whether this system should be replaced with expert health courts, but leaders who say they want to cut costs will not even consider them.

What are they scared of? The answer is inescapable - such expert courts might succeed and undercut the special interest of an influential lobby, the trial lawyers.

Ooh... the evil trial lawyers, so influential in the battle against "tort reform" that they've defeated tort reform efforts in.... I lose track... Is it now zero states? And in the Democratic and Republican presidential primaries they successfully kept... was it zero candidates from speaking out in favor of tort reform? And they've so coopted President Obama that you would never find him saying things like "medical liability issues - I think all those things have to be on the table".

Aw, but why let the facts get in the way of a talking point. Besides, on a big picture level, isn't he right - lobbyists distort the debate and we would be better off if they stayed out, or at least were honest about their role as lobbyists? Who wrote the column again.... One Philip K. Howard. The Post dutifully omits most of his qualifications from his mini-bio:

The writer is chairman of Common Good, a nonprofit legal reform coalition, and a partner with the law firm Covington & Burling LLP.

He's a what with the where now? A partner at Covington & Burling?

Covington & Burling is a major legal and lobbying firm focused on "industry and regulatory" and "corporate, tax and benefits" issues, and litigation. They have U.S. offices in Washington D.C., New York City and San Francisco, and European offices in London and Brussels.

Oh, but maybe it's a good lobbying firm that would never lie to the American public....

Covington & Burling also served as "corporate affairs consultants" to the Philip Morris group of companies, according to a 1993 internal budget review document which indicated the firm was paid $280,000 to "serve as general counsel to the Consumer Products Company Tort Coalition, agree the legal objectives with member company litigators, draft legislation and amendments, prepare lobby papers and testimony for legislative committees and administer the coalition's budget".

Covington & Burling was involved in organizing Philip Morris' Whitecoat Project, designed to help obscure the health effects of exposure to secondhand tobacco smoke.

And who does Mr. Howard's firm represent in the healthcare industry?

Covington advises and represents pharmaceutical manufacturers, device manufacturers, hospitals, health plans, and other health care providers on issues involving reimbursement in the Medicare and Medicaid programs and issues of health information privacy.

Everybody but the little guy. Surprised?

You'll find one constant in the columns by lobbyists and industry consultants of any political persuasion - at least those who aren't on the fast track to the unemployment line - when given a public platform, they never editorialize against the interest of their firm's clients.

Krauthammer's Magic Answers

Typically, when you read the title to a Charles Krauthammer column you've read enough to anticipate all of the bloviating that follows. He's entirely predictable, consistently irrational, and is a remarkably weak thinker for a guy who otherwise seems to be reasonably intelligent. The only deviation from the norm is that today's title, Health-Care Reform: A Better Plan doesn't telegraph what follows (although I guess it could serve as a punch line).

Krauthammer claims that only two things are needed to "reform" healthcare in this country. The abolition of malpractice liability for doctors in favor of a taxpayer-funded pool for the victims of malpractice, and a tax increase on the middle class accompanied by a market-distorting tax credit. Seriously.

Krauthammer rattles off the usual set of fictions about the present malpractice system: It's a "casino", settlements are "random", it raises "everyone's insurance premiums" and "creates an epidemic of defensive medicine". The facts, of course, are something else entirely. Most malpractice victims never make claims. Most malpractice cases are correctly decided. Those in which are arguably wrongly decided in favor of the plaintiff have smaller-than-average recoveries. About one in six malpractice cases are wrongly decided in favor of the doctor. This all coming from the New England Journal of Medicine.

Whereas Krauthammer's spinning like a top, I'm relying on the best available data. It would be helpful to have similar statistics from larger studies and analyses - the types that malpractice insurance companies perform for their own internal use - yet for some inexplicable reason, they can't bring themselves to release the results of their own number crunching. (Could it be... because they back up the NEJM? Dare I say, obviously?) I'll give Krauthammer the "benefit of the doubt" that he's repeating the conventional wisdom on the knee-jerk right. It's possible that he knows better, but I don't get much of a sense that he's interested in facts that contradict his biases.

Krauthammer then cherry-picks the most outrageous figures for the "cost" of "defensive medicine" that he can find, purporting,

Defensive medicine, estimates the libertarian/conservative Pacific Research Institute, wastes more than $200 billion a year.

Let's take that "biggest number Krauthammer could find", and assume that he actually believes the entire amount could be eliminated. With healthcare spending projected to hit $2.5 trillion this year, the first half of Krauthammer's "solution" is to cut spending by 8%? With healthcare costs rising at about 7% per year, that should cover about 14 or 15 months of inflation, then what? And if we adopt a more realistic assessment of "defensive medicine" or acknowledge that there's good cause to question if it even exists, we're talking a couple months, days... maybe nothing? Brilliant.

But it gets better. Krauthammer's "cure" for this problem is worse than the disease. Remember, by definition "defensive medicine" is not about reaching a correct diagnosis - by definition, the doctor believes that he has already made the correct diagnosis, and he's ordering an additional unnecessary test as backup in case he's later, unfairly accused of malpractice because it turns out that he's wrong. As I've previously stated,

The argument behind "defensive medicine" is that doctors are so fearful of being sued that they order unnecessary medical tests in order to avoid the possibility of being incorrect in a diagnosis. From a legal perspective this makes little sense, given that doctors dictate the standard of care. If a doctor can meet the standard of care defined by his own profession without prescribing the "unnecessary" test, there's no malpractice suit. Sure, it can be a bit more complicated than that if you have disagreement as to the standard of care. But if 99% of the doctors in a particular legal jurisdiction would not order the test, even in the unlikely event that an expert witness would assert that a violation of the standard of care had occurred, a plaintiff would have a hard time arguing that they're all falling below the standard of practice for that region.

If the doctor is correct in his diagnosis, there will be no malpractice claims based upon his failure to order the test because the test will simply affirm his diagnosis. If the doctor is incorrect in his diagnosis, the test may prevent him from having to defend against the claim that his misdiagnosis was in violation of the governing medical standard of care, but in a case where the test is truly unnecessary it's not realistically possible for a plaintiff to meet the burden of proving a violation of the standard of care. If doctors are practicing bad medicine by sending their patients for unnecessary testing, and insurance fraud by contending that those unnecessary tests are medically necessary so as to get paid by health insurers, I think they need to take ownership of the problem rather than trying to blame lawyers.

But here's the central issue: The claimed practice of defensive medicine is premised upon the fear of being wrongly sued for malpractice. That does happen, as the NEJM points out, principally when the patient and her lawyer have no way of assessing the merits of a malpractice claim without filing a suit to compel the disclosure of records and testimony from the treaters:

The profile of non-error claims we observed does not square with the notion of opportunistic trial lawyers pursuing questionable lawsuits in circumstances in which their chances of winning are reasonable and prospective returns in the event of a win are high. Rather, our findings underscore how difficult it may be for plaintiffs and their attorneys to discern what has happened before the initiation of a claim and the acquisition of knowledge that comes from the investigations, consultation with experts, and sharing of information that litigation triggers.

On to the Krauthammer "reform":

What to do? Abolish the entire medical-malpractice system. Create a new social pool from which people injured in medical errors or accidents can draw. The adjudication would be done by medical experts, not lay juries giving away lottery prizes at the behest of the liquid-tongued John Edwardses who pocket a third of the proceeds.

Who cares that juries are in fact pretty good at figuring out who should prevail - and that they are more likely to err on the side of doctors than patients. As the NEJM documented,

Although the number of claims without merit that resulted in compensation was fairly small, the converse form of inaccuracy - claims associated with error and injury that did not result in compensation - was substantially more common. One in six claims involved errors and received no payment. The plaintiffs behind such unrequited claims must shoulder the substantial economic and noneconomic burdens that flow from preventable injury. Moreover, failure to pay claims involving error adds to a larger phenomenon of underpayment generated by the vast number of negligent injuries that never surface as claims.

Talk to a medical malpractice lawyer about the culmination of a typical client intake interview. Most prospective clients are gently turned away because, even though they may have suffered serious injury to their person, they don't have a viable medical malpractice claim. The next largest group is gently turned away because, although they may have a viable claim, the amount that could conceivably recovered isn't sufficient to justify the significant expense of a malpractice lawsuit. Doctors are spared having to confront the accusations of those patients.

Under Krauthammer's system, instead of consulting lawyers, those people will be told to fill out a form and initiate some sort of administrative hearing against their doctor. The doctor will have to respond to the allegations, spend time assembling documentation or other evidence in support of the response, and possibly have to sit through a hearing for an allegation that would have gotten nowhere under the current tort system. If the premise of "defensive medicine" is that doctors are ordering unnecessary tests so that they don't have to be wrongly accused of malpractice, what's going to happen under Krauthammer's system when those accusations increase exponentially? Further, those "small ticket" malpractice cases that aren't financially viable to litigate will be filed - resulting in an increase in the number of doctors found to have committed malpractice. Even further, some people who "just don't want to sue their doctor" despite clear medical error will not have the same compunction about filing a claim in a system where compensation is entirely divorced from their doctor's pocketbook.

The pool would be funded by a relatively small tax on all health-insurance premiums. Socialize the risk; cut out the trial lawyers.

Even in the nations that Republicans like to point at and scream "socialist", have any implemented socialism on the scale Krauthammer proposes? It's interesting that in nations that centralize and regulate malpractice premiums (e.g., Canada, the U.K.), premiums have historically increased at a lower rate than in the U.S. even when claims were increasing at a higher rate. But not even those "commie nations" have embraced Krauthammer's pure socialism - they seem to think that there should remain some association between the cost of malpractice and the risk that a particular practice area or practitioner poses to a patient.

And that's before we get to basic issues of fairness and due process, in denying malpractice victims the right to be represented by a skilled, knowledgeable advocate when they're trying to prove medical malpractice. Would Krauthammer also ban appeals?

Krauthammer recognizes that there's a danger in effectively immunizing doctors from financial liability for their malpractice, even if he doesn't think they value the time they would have to pour into the defense of a multiplicity of new claims. So he proposes this:

Would that immunize doctors from carelessness or negligence? No. The penalty would be losing your medical license. There is no more serious deterrent than forfeiting a decade of intensive medical training and the livelihood that comes with it.

Is he for real? Any finding that a doctor has committed medical malpractice will result in the immediate and permanent loss of the doctor's medical license? And he thinks the present system encourages defensive medicine?

Please note, the mere fact that I recognize Krauthammer's proposals as imbecilic does not mean that I oppose sensible malpractice reforms. But if this is Dr. Krauthammer's prescription for reform, we should all be able to recognize it as malpractice.

Krauthammer's other "solution":

Tax employer-provided health-care benefits and return the money to the employee with a government check to buy his own medical insurance, just as he buys his own car or home insurance.

There's a good case that can be made for phasing out the tax subsidy for employer-based health insurance, but those who favor its immediate elimination are not interested in reform - they're interested in chaos. They're not interested in placing people in good, stable group health insurance plans. They're interested in shifting people to various alternate plans that offer poor coverage, high premiums, in all likelihood higher cost than the employer-sponsored plans. And, at this juncture, there's every reason to believe that Krauthammer is shilling for one of those groups:

If we additionally eliminated the prohibition on buying personal health insurance across state lines, that would inject new and powerful competition that would lower costs for everyone.

There is, of course, no reason that insurance companies cannot enter additional states, offering plans in those states, right now. The impediment is that to set up health coverage you need to create a network of participating doctors, clinics and hospitals who accept your plan. To the extent that Krauthammer's suggesting that allowing the sale of "health insurance across state lines" would remove those barriers to entry, he's a bald-faced liar.

What this proposal is, in fact, about is allowing insurance companies to relocate "on paper" to low-regulation states, then sell policies in high-regulation states. So if you're in a state that mandates coverage for a particular health condition, your insurance company can hop across the state or the country, reform itself under the lesser regulations of a new state, and offer a policy that does not include that coverage. As with corporate regulation, this will trigger a "race to the bottom", with a number of states offering a minimum of regulation of insurance companies in order to entice them to incorporate there, even though they don't offer any coverage in that state. You may end up with cheaper coverage, but you'll lose your choice for more comprehensive coverage. And you won't end up with more choices, because the insurance companies still won't want to incur the costs of developing new provider networks in your state.

Krauthammer doesn't explain how either one of these "reforms" will help anybody gain better, more affordable or more comprehensive insurance, or allow even one uninsured person to gain coverage. But then, I'm being unfair - Krauthammer never stated that when he said his reform plan was "better" that he meant it was better for ordinary, working people.

The Innumerate Michael Kinsley

It should, perhaps, go without saying that you shouldn't take financial advice from a guy who can't do simple math, but in case you somehow glossed past this doozy from Michael Kinsley on healthcare reform:

My list would start with malpractice reform. An achingly balanced CBO report last year cited a study showing that victims of medical negligence are 2 1/2 times more likely to get compensation than people who were not victims. This was an argument against reform: that for every dollar going to victims of malpractice, "only" 40 cents goes to plaintiffs who have no case at all.

Does it need to be explained that his conclusion isn't supported by his claimed data? Nothing in the snippet he presents describes either the frequency of claim by people who are "not victims" or the relative amounts of recovery.

Kinsley could have easily tracked down the study online. It's easier than ever - before I had even finished typing the third word of the title into Google, it was offering to auto-complete the title as a search term. Ten seconds.

Looking at some of the data from the study, the issue seems to be this: The study found that of 1452 malpractice claims, 889 involved both error and injury. Of those claims, 73% of claimaints received compensation. In contrast, by the study's criteria, 515 claims involved injury without medical error at 37 claims involved neither injury nor medical error. Of those claims, 151 (27%) resulted in compensation. 73% is "approximately 2 1/2 times" 27%.

But as the study plainly states:

Our findings point toward two general conclusions. One is that portraits of a malpractice system that is stricken with frivolous litigation are overblown. Although one third of the claims we examined did not involve errors, most of these went unpaid. The costs of defending against them were not trivial. Nevertheless, eliminating the claims that did not involve errors would have decreased the direct system costs by no more than 13 percent (excluding close calls) to 16 percent (including close calls). In other words, disputing and paying for errors account for the lion's share of malpractice costs. A second conclusion is that the malpractice system performs reasonably well in its function of separating claims without merit from those with merit and compensating the latter. In a sense, our findings lend support to this view: three quarters of the litigation outcomes were concordant with the merits of the claim.

That is, Kinsley would have difficulty being more wrong if he tried.

Since Kinsley raised the subject, though, it is fair to ask "Exactly what would this 'malpractice reform' look like?" Would it diligently ferret out all actual claims of malpractice - as the study indicates, "the great majority of patients who sustain a medical injury as a result of negligence do not sue." Apparently not. Even if administrative costs were pared to the bone for such a system, that approach would significantly increase expenditures on medical malpractice claims. What if there were better ways to ferret out claims without merit?

Although one third of the claims we examined did not involve errors, most of these went unpaid. The costs of defending against them were not trivial. Nevertheless, eliminating the claims that did not involve errors would have decreased the direct system costs by no more than 13 percent (excluding close calls) to 16 percent (including close calls). In other words, disputing and paying for errors account for the lion's share of malpractice costs.

So what precise reforms does Kinsley propose that will save us the 13-16% of current malpractice expenditures that go to defending against claims that should not have been filed?

The authors of the article explain why these cases are filed in the first place:

The profile of non-error claims we observed does not square with the notion of opportunistic trial lawyers pursuing questionable lawsuits in circumstances in which their chances of winning are reasonable and prospective returns in the event of a win are high. Rather, our findings underscore how difficult it may be for plaintiffs and their attorneys to discern what has happened before the initiation of a claim and the acquisition of knowledge that comes from the investigations, consultation with experts, and sharing of information that litigation triggers. Previous research has described tort litigation as a process in which information is cumulatively acquired.

Well, we could require the disclosure of the outcome of peer review to patients and their families. (You think doctors howl about malpractice... just try legislating public peer review.)

Having noted the fact that a huge factor in the cost of malpractice litigation lies in trying to penetrate the wall between the patient and information that can lead to proper assessment of malpractice cases, the authors of the study make this curious suggestion:

The combination of defense costs and standard contingency fees charged by plaintiffs' attorneys (35 percent of the indemnity payment) brought the total costs of litigating the claims in our sample to 54 percent of the compensation paid to plaintiffs. The fact that nearly 80 percent of these administrative expenses were absorbed in the resolution of claims that involved harmful errors suggests that moves to combat frivolous litigation will have a limited effect on total costs. Substantial savings depend on reforms that improve the system's efficiency in the handling of reasonable claims for compensation.

The authors' mistake, of course, is in assuming that malpractice reforms are primarily meant to reduce frivolous litigation. It should be patent from the result that they are designed to make it more difficult and enormously more costly to get any malpractice case to trial, to increase risk to the plaintiff's lawyer both by vastly increasing the amount of money it takes to litigate a claim and by forcing a significant expenditure to investigate other claims before they can even be properly reviewed for merit, and to place economic pressure on the plaintiff to settle by dragging out the litigation process and by imposing caps that limit the amount of damages that a severely injured plaintiff can recover.

If we truly wanted to create an efficient system that allowed plaintiffs' lawyers to minimize the number of questionable cases they bring, reduced the cost of litigation, shortened the time it takes to litigate a case, and ensured that people received fair and appropriate damages, a good place to start would be by jettisoning the "reforms" that have been implemented to date that largely benefit the insurance industry and taking a good hard look at other systems. I suspect that malpractice victims would be largely supportive of a two-track system, one of which involves fair, fast administrative review of malpractice claims but with limits on non-economic damages (perhaps even a schedule of damages) and limits on attorney fees similar to worker's comp, and a more traditional tort-based system. Mind you, a number of "small damages" cases that aren't economically viable under the current system (e.g., negligent misdiagnosis of appendicitis resulting in a rupture) might become viable under such a reform, but damage awards for such claims should be small. I'm not convinced that such a system would turn out to be cheaper, but it should turn out to be a lot more fair and a lot more efficient than a pure tort-based system.

In short, the study Kinsley indirectly relies upon suggests that we would get minimal savings from reforms directed at "frivolous" cases, but that the greater sin of the current system is that an even greater number of actual malpractice victims end up with no recovery. That is, if you were to somehow make the authors' wishes come true, and the system were made more accurate, you would end up increasing the cost of the system due to the appropriate grant of compensation to claimants who are wrongly denied recovery.

I don't think Kinsley's a stupid man. But given the magnitude of his errors on this subject, he should perhaps reflect on whether he should limit his writings to subjects he actually understands.