Report: Reining in lawsuits would cut deficit

Bolstering what’s likely to be a key health care reform argument from Republicans, Congress’ budget scorekeeper ruled that limiting medical malpractice lawsuits would reduce the federal deficit by $54 billion over 10 years.

The Congressional Budget Office - in an analysis that projects a nearly10-fold increase in savings over its findings last year - said tort reform would cut costs by limiting the use of diagnostic tests and other services health care providers and doctors use to reduce exposure to lawsuits.

In explaining the increase in savings, CBO Director Douglas Elmendorf told lawmakers “recent research has provided additional evidence that lowering the cost of medical malpractice tends to reduce the use of health care services.”

Tort reform has been one of Republicans’ top health care reform proposals, but it hasn’t been embraced by congressional 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.

“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,” said Sen. Orrin G. Hatch, Utah Republican, who requested the analysis.

“Unfortunately, up to now, that has been all the president and his Democratic allies in Congress have been willing to provide on these issues.”

The analysis was not tied to specific legislation, but cited reform ideas such as limiting pain-and-suffering awards to $250,000, limiting punitive damage awards at $500,000, limiting attorneys fees or implementing a one- to three-year statute of limitation.

Such proposals would reduce national health care spending by about 0.5 percent, or $11 billion in 2009. That includes the reduction in malpractice premiums as well as a 0.3 percent reduction in health care services spending from providers ordering procedures out of concern for being sued.

The group found that this year, health care providers will spend about $35 billion on malpractice liability, including premiums and awards.

The American Association for Justice, a trial lawyers trade group, said the news from CBO shows that there is limited financial gain and much health risk at reforming medical malpractice laws.

The “findings reiterate what we’ve always known, that medical malpractice claims have almost no effect on overall health care spending,” association President Anthony Tarricone said Friday. “Along with the CBO’s numbers and countless other academic assessments, the vast majority of empirical evidence suggests that there are only minuscule savings to be found in reforming our nation’s civil justice system.”

The CBO said there was not enough evidence to determine whether reforming medical malpractice laws, designed to let patients sue for damages resulting from negligent care, would have a negative impact on health outcomes. The group cited studies that showed mix results.

Republicans praised the $54 billion in potential savings.

“Doctors often order tests just to protect themselves from lawsuits, not to treat patients,” said Sen. Charles E. Grassley of Iowa, the top-ranking Republican on the Finance Committee. “The more federal health care programs spend on unnecessary tests, the less money is available for necessary patient care.”

Mr. Grassley also criticized Democrats for not including tort reform in their health reform bills, though any substantial tort plan would likely have to go through the Judiciary Committee, which doesn’t have jurisdiction over health care reform.

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