May 23

Civil Justice Reform Still Has a Place

by Newt Gingrich and Wayne Oliver
Originally published in Politico.com on October 21, 2009     Also published in The Detroit News

As congressional leaders meet behind closed doors to merge a compromise by the Senate, House and White House on a health care reform plan before the holidays, some might believe the task seems monumental.

Add the concept of civil justice reform to the mix, and the job may appear impossible because of political forces on each side.

But if the president and Congress are honest about what they have been saying all year — that health care reform is about health care expenses, costs that affect each of us — then it is still not too late to insert civil justice reform into the health care proposal.

Perhaps no other piece of health care reform is known to provide as much savings and fix the problem of defensive medicine, skyrocketing medical malpractice insurance premiums and how those costs are passed along to the consumer. It can be corrected through civil justice reform.

On October 9, the Congressional Budget Office pronounced that a tort reform, or civil justice reform, package would reduce the federal budget deficit by an estimated $54 billion over the next 10 years. At the Center for Health Transformation, we believe that is a low estimate and just a drop in the bucket in terms of savings if civil justice reforms were enacted.

The projected savings were based primarily on physicians paying lower premiums for medical liability insurance; therefore, patients, employers and health plans would also pay less for physician services.

But for the first time ever, CBO has recognized that civil justice reforms also have an impact on the practice of “defensive medicine.” Defensive medicine is when doctors order more tests or procedures than are truly necessary just to protect themselves from frivolous lawsuits. Studies show that defensive medicine does not advance patient care or enhance a physician’s diagnostic capabilities.

Doctors and hospitals regularly practice defensive medicine, which adds significant costs to every single American who seeks health care services — whether he or she has private insurance or a government-sponsored plan such as Medicare.

The CBO projection of $54 billion in savings with civil justice reform was an important acknowledgement. Yet we believe this is just the tip of the iceberg.

According to several studies, the real cost of defensive medicine is between $151 billion and $210 billion annually. Civil justice reforms such as health courts, caps on noneconomic damages, and creating safe harbors or protections from lawsuits for physicians who incorporate best medical practices could go a long way toward significantly reducing or eliminating defensive medicine. That $151 billion to $210 billion in savings could be used to provide health insurance for the uninsured without raising taxes on those who already have insurance policies.

Civil justice reform is simple. It neither increases our taxes nor expands the federal bureaucracy.

So as the debate rages on in Washington over what to do about health reform, civil justice reform continues to be pushed to the back burner. The president called for a closer examination of successful state-based civil justice reform solutions. But we already know what works.

  • California passed civil justice reforms more than 30 years ago, and malpractice premiums in several specialties are now as much as 50 percent lower than those in states such as New York, Pennsylvania and Florida.
  • Texas recently adopted comprehensive legal reform, and more than 10,000 doctors have returned to the state or decided to move to Texas as a result of civil justice reforms. Communities in Texas that once did not have primary or specialty care doctors now have a full complement of physicians.

In these final weeks, it will come down to this: Congress and the president have the option of saving between $54 billion and more than $200 billion by embracing civil justice reform.

But it will take bold leaders willing to stand up to personal injury lawyers instead of taxing Americans and cutting Medicare benefits. Surely this Congress and this president won’t leave tens of billions of dollars on the table.

If health care reform is really about the American people, Congress won’t charge us another dime, nor will it run up the deficit during the worst economic period in 70 years. Instead, Congress should surprise us with savings that can cover the uninsured while bringing an end to defensive medicine and costly nuisance litigation.

Former House Speaker Newt Gingrich (R-Ga.) is founder of the Center for Health Transformation. Wayne Oliver is a vice president of the center and directs its Health Justice Project.



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