The Myth of Defensive Medicine Costs

From MIKE KING

The standard refrain of opponents to comprehensive health care reform efforts, like Obamacare, is that one of the major drivers of escalating medical cost is defensive medicine practices caused by fear of lawsuits. Fix that and you’ll move a long way toward keeping health costs from escalating, or so the theory goes. The science to back up this claim has never been borne out.  Yet Red State legislatures — including Texas and Georgia — dutifully bought the wisdom of conservative think tanks in recent years and enacted tort reforms making it more difficult to file, as well as limiting the amount of damages plaintiffs can win in medical malpractice lawsuits. Now we have some additional studies that these news laws haven’t really made much of a difference in terms of controlling costs. Today’s New York Times Upshot reports about it.

When you talk about rising health care costs you have to deal with, among other things: an aging population in need and demanding care for chronic illnesses;  new, more sophisticated medical technologies that replace cheaper, less expensive diagnostic tools;  the high-cost of recovering research expenses by overcharging for new drugs to the market; a reimbursement system that pays physicians more for ordering tests and procedures than it does for keeping patients well; and the 20-25 cents on the premium dollar that goes to profit, marketing and administration of commercial health insurance plans. The fear of malpractice, no doubt, is another factor. But it is chump change. And when you hear it come up in serious policy discussions, it is more than likely just a way to distract you from the serious issues this country still faces in making health care affordable.

Mike King is a retired health policy reporter, editor and columnist for The Atlanta Journal-Constitution. He is the author of “Diversion,” a book about how large public hospitals have become the safety valve for the nation’s highly profitable $3 trillion a year health care economy. The book — as viewed through the experience of Atlanta’s Grady Memorial Hospital — is expected to be published next year.

6 thoughts on “The Myth of Defensive Medicine Costs”

  1. Mike. Interesting little blog you have here. I think it would be a fair assumption that you have never practiced medicine. If you had, you would understand the level of defensive medicine that is required in practice today. I have not reviewed the studies out of TX with regard to healthcare tort reform. Perhaps you would like to share a statistical analysis of the articles that you cite. Yes, you are correct in suggesting that defensive medicine is only ONE component of multiple drivers that increase the cost of healthcare in the US. Funny, how you criticize insurance companies when OBAMACARE works hand in hand with big insurance to facilitate insurance profitability. What lens are you using?

    1. Wow. This particular post is a year old. Glad to know you can still find it.
      Nope. Not a doctor. Never played one on TV either. But been around plenty as a journalist and, more recently, as a patient. So I know a little bit about how doctors practice. Sure, my view is that defensive medicine is still being practiced in Georgia and other tort-reformed states, but it is not a significant factor in increasing overall health care costs compared to other drivers like technology, drug prices, etc. There’s a link in the post to the New York Times story that includes links to several studies on the issue, including the landmark 2010 Health Affairs study on the low costs of defensive medicine and the small savings from tort reform and the NEJM study a year ago about malpractice reform laws in Texas, Georgia and South Carolina. (The study that prompted my post.)

      1. Sorry, you asked about how I feel about Obamacare working hand-in-hand with insurance companies “to facilitate profitability.” My feeling is that as long as we want to maintain a system of commercial health insurance in this country — as opposed to nationalizing it in a single-payor plan — then we have to be willing to allow some level of profitability among those companies that agree to sell policies with the benefits we demand. I would have set their medical loss ratios much tighter than CMS did (80 percent) because it is easy for them to roll high profits into overall administrative costs, but that’s just me.

  2. Defensive medicine is no myth. That is a quite disinguous statement. According to Health Affairs, defensive medical costs were in the order of $55 billion (2.4% of the healthcare costs) in 2008. Not insignificant. Mind you, this is an intangible number as there is not a good way to calculate ‘defensive medical cost’. Irregardless, you would be wise to review the TX HB4 and how this legislation dramatically improved PATIENT ACCESS to healthcare, facilitated the entry of many new physicians to TX (i.e. MORE RURAL PHYSICIANS), and enhanced the TX economy. If you are truly honest with yourself, OBAMACARE simply overlayed a dysfunctional healthcare system with a massive Federal bureaucracy. Obamacare did nothing to address systemic problems. At least tort reform represents an effort in solving problems.

    1. Yes, defensive medicine costs are hard to calculate and, as the Health Affairs article makes clear, there are some defensive medicine costs that can be classified as a positive — so some of that $55 billion (or whatever the number is now) should be considered appropriate to reduce the number of medical errors, confirmatory diagnostics and for other appropriate reasons. My point of view on tort reform is that it needs to be weighed against other efforts that are better targeted to the specialists where the cost of malpractice is highest — Ob-GYN, anesthesiology, neurosurgery, etc. Perhaps some of the reform efforts in the states would be worth enacting on a national level. If you have some research on patient access to health care after the Texas form reform effort, I’d love to look it over. There is no data on that here in Georgia after our state enacted tort reform about a decade ago.

  3. Regarding insurance companies, your wish is coming true! There is massive consolidation occuring in the insurance industry. Very soon, the remaining ‘too big to fail’ players will be nothing more than administrators for the nationalized healthcare system. They will be kept in check by increasing the medical loss ratios. I suppose that is more equitable – well until you have a personal encounter with denial of care. Hmmmmmmm.

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