July 20, 2011

Med Mal Reform a Key to Budget Deal

Statement of CFJ Executive Director Curt Levey:

The Committee for Justice applauds the inclusion of medical malpractice reform in the bipartisan Gang of Six debt ceiling plan that was reported to be gaining traction on both ends of Pennsylvania Avenue yesterday. CFJ takes no position on the overall structure of a deal. However, we believe the inclusion of malpractice reform in any compromise is good news both for conservatives’ long-held goal of reforming the nation’s medical liability system and – because it will encourage conservatives’ acceptance of a deal – for hopes of resolving the debt ceiling impasse.

The Gang of Six plan follows the recommendation for “an aggressive set of reforms” to the medical liability system contained in the December 2010 budget-balancing report of the bipartisan Bowles-Simpson Commission. The Commission concluded that the current liability system “leads to an increase in health care costs … both because of direct costs – higher malpractice insurance premiums – and indirect costs in the form of … ‘defensive medicine.’” Accordingly, the commissioners recommended at least four major changes to the rules of malpractice litigation, in addition to the creation of specialized “health courts” for medical malpractice lawsuits.

Under the Gang of Six plan, the final details of medical malpractice reform would fall to the Judiciary Committee. The Gang’s plan requires various congressional committees to write the legislation implementing the plan’s promised savings in entitlement programs.

Medical malpractice reform is arguably conservatives’ favorite prescription for containing health care costs. Thus, its inclusion in the Gang of Six plan could play an important role in motivating otherwise skeptical House Republicans to support the plan.

The bad news is that the initial summary of the Gang of Six plan released yesterday contains no specifics about the malpractice reform. To be worthy of conservatives’ support, a final debt ceiling compromise must contain specifics, such as a requirement for implementing all of the litigation rule changes recommended by the Bowles-Simpson Commission and a specific savings target that would encourage aggressive implementation of the reforms. As the details of the Gang of Six plan are hashed out, we encourage Republican negotiators to focus on these specifics.

A study by PriceWaterhouseCoopers estimated that ten percent of the nation’s health care spending is consumed by the costs of defensive medicine, medical malpractice insurance, and malpractice litigation. Thus, if done right, aggressive medical malpractice reform would result in huge budget savings through lowered Medicare, Medicaid, and other federal spending for health care.

Including malpractice reform in a deal would not only help sell it to conservatives, but would also make it popular with the American people generally. After all, “83 percent of the nation's electorate want Congress to address reform of the medical malpractice system as part of any health care reform plan,” according to a 2009 survey reported by Medical News Today.

Finally, fairness requires the inclusion of malpractice reform in any budget deal. Given that up to 40 percent of medical malpractice lawsuits are groundless, according to a study by the Harvard School of Public Health, reigning in the excesses of trial lawyers in this area is a moral as well as financial imperative. As the Bowles-Simpson Commission implicitly recognized, those excesses are part of the reason for our runaway budget deficit. If the pain of balancing the budget is to be shared by all, surely trial attorneys must bear their share of the burden.

As former Democratic National Committee chairman Howard Dean admitted, the only reason why medical malpractice reform was not included in ObamaCare was “because the people who wrote it did not want to take on the trial lawyers." If President Obama and Congressional Democrats are now ready to take on the trial lawyers, we welcome their help in accomplishing this important and long-sought reform.