CBO says tort reform reduces deficit

Bolstering what is likely to be one of the Republicans’ key health care reform arguments on the Senate floor, Congress’ budget scorekeeper ruled that medical malpractice reform could reduce the federal deficit by $54 billion over 10 years.

Tort reform has been one of Republicans’ top health care reform proposals, but it hasn’t been strongly embraced by Democrats. President Obama, in his address to a joint session of Congress last month, said he would consider tort reform legislation as part of his health care plan.

The trial lawyers bar, which strongly opposes tort reform is a major financial supporter of the Democratic Party.

The analysis from the Congressional Budget Office was in response to a proposal from Sen. Orrin Hatch, Utah Republican, that would cap non-economic damages on medical malpractice claims against doctors and health practitioners.

“I think that this is an important step in the right direction and these numbers show that this problem deserves more than lip service from policymakers,” Mr. Hatch said. “Unfortunately, up to now, that has been all the president and his Democratic allies in Congress have been willing to provide on these issues. I look forward to having a continued comprehensive dialogue on this critical issue with CBO.”

The CBO said the proposal would affect health care costs both directly and indirectly by “reducing the use of diagnostic tests and other health care services when providers recommend those services principally to reduce their potential exposure to lawsuits.”

Previously, the CBO focused its analysis on similar tort reform measures largely on their impact on malpractice insurance premiums. This was the first time the budget analysis agency looked at how tort reform would affect doctors’ use health care services, based on recent research, the group said.