Al Smith Commentary: “Injured Patients the Cause of Rising Health Care Costs?”

Well, the political campaign season is heating up. Tis the time for politicians to spout sound bites about how they will cure what ails us. All too often, it seems that politicians spend most of their efforts touting poll tested slogans for their ‘cures’ and ignoring the facts.

Now no one disagrees that the decades long increase in health care costs is a serious problem. Whether it’s increasing health insurance premiums, rising drug costs, or escalating hospital prices, everyone agrees those costs need to be constrained, or even lowered. And, we seem to have agreement among top Republican office seekers on how to do that. Congressman Rehberg and former Congressman Hill tout the ‘tort reform’ slogan as the primary way to cure what ails our health care system. Does ‘tort reform’ – stripping or inhibiting injured patients of their Constitutional right to a trial by jury for the injuries they have suffered – ‘cure’ our health care cost problem? Political sloganeering says yes, but the facts say no.

Perhaps Congressman Rehberg and former Congressman Hill are ignorant of the fact that Montana already has much of the so-called ‘tort reform’ they are touting. The Montana Medical Association has praised the forty plus pieces of ‘tort reform’ legislation passed over the past decades – including a cap on damages. So what has all that stripping of Constitutional rights gained for Montana when it comes to health care costs? Well, the facts say nothing, actually.

According to research done by the Kaiser Foundation found at statehealthcosts.org, Montana’s per capita health care costs are around $6,640 per year. Nearby Wyoming has virtually no ‘tort reform’ and no cap on damages, yet their per capita costs are only 6% higher than Montana’s. So, does that mean tort reform saves that 6% in costs in Montana? Well, no, there is no link – for example, North Dakota has ‘tort reform’ – including a cap on damages – and its per capita health care costs are 17% higher than Montana’s. The only logical factual conclusion is that there are other factors at work when it comes to actual health care cost differences.

Further proof of that comes from Texas, where their nearly decade long experiment with tort reform has not yielded the promised lowering of health care costs. A recent study published in the Journal of Empirical Legal Studies examined the effect of Texas’ 2003 tort reforms.

They looked at Medicare spending prior to 2003, and observed that spending levels and trends were similar in high- and low-risk counties – risk based upon previous levels of malpractice claims. After 2003 they found “no evidence that spending levels or trends in high-risk counties declined relative to low-risk counties.” The study actually found “evidence of increased physician spending in high-risk counties,” contrary to the political slogan expectation that protected by tort reform the health care industry would have lower costs as so-called defensive medicine deceased. The study also compared spending trends in Texas to national trends, and found “no evidence of reduced spending in Texas” after the reforms. The study actually found “evidence that physician spending rose in Texas relative to control states.” The study’s conclusion: “In sum, we find no evidence that Texas’s tort reforms bent the cost curve downward.”

So, no direct link between tort reform and health care costs, what are the causes? The Kaiser Foundation has looked at the numbers behind health care cost increases. The top factors that they came up with were higher spending on prescription drugs, higher spending for hospitals, higher spending for physicians, higher spending for better technology, and higher insurance company profits. Medical malpractice costs didn’t even make their cost driver radar.

While the particular percentages change from year to year, prescription drugs and new medical technologies continue as primary contributors to the increase in overall health spending. Kaiser also cites the rise in chronic diseases, with longer life spans and greater prevalence of chronic illnesses placing ever increasing demands on the health care system. Estimates put health care costs for chronic disease treatment at over 75% of health expenditures. And, administrative costs continue to be an increasing cost – those of government programs and the net cost of private insurance – overhead, reserves, taxes, and profits/losses.

The Affordable Care Act is not the be all-end all of health care cost containment, but it does at least offer some factually logical ways to reduce costs. So what do Congressman Rehberg and former Congressman Hill think of the Affordable Care Act? They want to repeal it.

Looking at the numbers, all malpractice costs amount to less than 2% of our total health care costs. The health care industry could receive total immunity from all lawsuits and it would lower health care costs only 2%. Yet the primary health care solution we get from Congressman Rehberg and former Congressman Hill is an empty political sound bite, ‘tort reform.’ Making it harder for injured people to seek justice is no solution, and it comes at a high cost – the further erosion of our constitutional rights.

Al Smith writes for the Montana Trial Lawyers Association

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