David Leonhardt had a recent article in the NY Times discussing the need to lower medical malpractice as away to lower medical malpractice litigations. Seems like common sense to me.
The direct costs of malpractice lawsuits — jury awards, settlements and the like — are such a minuscule part of health spending that they barely merit discussion, economists say. But that doesn’t mean the malpractice system is working.
The fear of lawsuits among doctors does seem to lead to a wasteful treatment. Amitabh Chandra — a Harvard economist whose research is cited by both the American Medical Association and the AAJ — says about 3 percent of overall medical spending, is a reasonable upper-end estimate. At the same time, though, the current system appears to treat actual malpractice too lightly. Trials may get a lot of attention, but they are the exception. Far more common are errors that never lead to any action.
After reviewing thousands of patient records, medical researchers have estimated that only 2 to 3 percent of cases of medical negligence lead to a malpractice claim. Medical errors happen more frequently here than in other rich countries, as the Robert Wood Johnson Foundation recently found. Only a tiny share of victims receive compensation. Among those who do, the awards vary from the lavish to the minimal.
All told, jury awards, settlements and administrative costs — which, by definition, are similar to the combined cost of insurance — add up to less than $10 billion a year. This equals less than one-half of a percentage point of medical spending.
Research — into various surgical operations, for instance — has found less of evidence of defensive medicine. The problem is that just about every incentive in our medical system is to do more. Most patients have no idea how much their care costs. Doctors are generally paid more when they do more. Similarly, you would want to see more serious efforts to reduce medical error and tougher discipline for doctors who made repeated errors — in exchange for a less confrontational, less costly process for those doctors who, like all of us, sometimes make mistakes.
The goal, remember, isn’t just to reduce malpractice lawsuits. It’s also to reduce malpractice.