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Jul 31

Escalating Healthcare Costs Illustrate Need for Georgia Solution

by Wayne Oliver

Originally published in the Savannah Morning News on July 31, 2015

As the campaign season for the 2016 race for the White House commences, many of us are going to hear a lot about the state of health care in America and what needs to be done to rein in healthcare costs.

Health insurance companies across the country are seeking rate increases of 20 to 40 percent for next year – attributing most of the rate hikes to new, unhealthy customers insured under the Affordable Care Act. In Georgia, state Insurance Commissioner Ralph Hudgens reports health insurance carriers are seeking rate hikes that average 15 percent but with some as high as 38 percent.

The ACA did nothing to reduce healthcare costs, and Washington will not consider addressing healthcare until the election is over and we have a new president.

If we are to get a handle on rising healthcare costs — from escalating premiums to higher co-pays, deductibles and co-insurance costs —  the solution is going to have to come from the states and not from the federal government. Georgia is one of those states trying to do just that with legislation aimed at eliminating the practice of defensive medicine

Physicians practice defensive medicine when they order more tests, procedures and medications than are clinically necessary. They do it to prevent litigation.

In 2010, Gallup surveyed doctors nationwide and found one in four healthcare dollars could be attributed to defensive medicine. A survey released earlier this year by the Official Journal of the Congress of Neurological Surgeons found more than 75 percent of neurosurgeons said they practice defensive medicine to protect themselves from lawsuits.

BioScience Valuation, a healthcare economics firm, estimates the cost of defensive medicine will reach $487 billion nationwide in 2015. These unnecessary healthcare costs are passed along to consumers and taxpayers.

Georgia is among five states looking to end defensive medicine through legislation introduced in the state senate and up for consideration this coming year called the Patients’ Compensation System. Under this proposal, our state would eliminate our broken, dysfunctional medical malpractice litigation system that frightens physicians into practicing defensive medicine.

Instead, we would create a no-blame, administrative model in which an injured patient would instead file a claim that would be decided by a panel of healthcare experts. If the panel determined an avoidable medical injury had occurred, the patient would be compensated.

With no need to worry about lawsuits, doctors would no longer need to practice defensive medicine. That would save all of us money as healthcare costs would start to decrease as would health insurance rates.

The proposed legislation is capturing the attention of physicians as well. A provision requires that physicians would no longer have to carry medical malpractice insurance. Instead they would pay into a state fund for coverage for potential lawsuits — averaging less than a third of what they were paying in malpractice premiums in many cases.

For example, an OB-Gyn who pays about $64,884 in malpractice coverage annually would instead pay $19,500 to an administrative system. Plastic surgeons, who are meeting in Savannah this week to discuss the plan, would pay $12,500 compared to the $41,728 they now pay for malpractice coverage.

When doctors no longer face litigation that could impact their personal wealth, they will stop practicing defensive medicine. They will also be willing to admit their errors and work on best practices for other doctors.

Estimates are a patient-compensation system enacted in Georgia would save Georgia taxpayers almost $7 billion over a decade, according to BioScience Valuation. Similarly, such a solution could save Georgia employers more than $30 billion over the same 10-year period.

Insurance premiums, co-pays and out-of-pocket expenses will continue to skyrocket if states don’t step up and address healthcare costs. Consumers don’t have time to wait for a new President or Congress to consider the issue of defensive medicine. Instead, a state-based solution would put Georgia on the map as a pioneer in reducing healthcare costs for patients, employers and physicians while bringing faster access to justice to those who have been harmed.

Wayne Oliver is executive director of Patients for Fair Compensation, a nonprofit seeking to implement the Patients Compensation System.

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