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OLIVER: How eliminating defensive medicine could save trillions

Georgia and Florida lead the way to needed reforms

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As the calendar later this week marks the third anniversary of passage of the most controversial legislation in a generation -- the Patient Protection and Affordable Care Act, otherwise known as Obamacare -- states are beginning to grapple with how to cope with the unbearable costs associated with the new federal health care reform law.

Many states are rebelling against provisions such as state-created marketplaces or "exchanges" for low-income workers to purchase health insurance or expand the pool of residents who qualify for Medicaid. A few, however, are embracing the true concept of health care reform -- finding a path to reduce health care costs for everyone.

Two pioneers leading the charge to slash costs and create a less-contentious environment in the practice of medicine are Georgia and Florida. There, lawmakers are considering legislation that would eliminate one of the biggest drivers of health care costs: the practice of defensive medicine.

They would do it by completely repealing their state's medical tort system so that no doctor, hospital or medical provider would ever be sued again.

Defensive medicine occurs every day in physicians' offices and hospitals throughout the country. It happens when doctors order more tests, procedures or medications than are clinically appropriate to avoid a lawsuit. We all pay for that with higher insurance premiums and larger out-of-pocket expenses.

Gallup surveyed doctors in 2010 just as President Obama was pushing his health care law. The poll found that 1 in 4 health care dollars spent in our country can be attributed to the routine practice of defensive medicine. That translates to an estimated $480 billion annually.

The Georgia and Florida proposals would eliminate defensive medicine and create billions in health care and taxpayer savings. In exchange, the plan would replace the medical tort system with a no-fault, administrative model similar to a workers' compensation system.

This would revolutionize the medical-malpractice system so that no physician would feel compelled to practice defensive medicine. Moreover, all injured patients would be compensated for their loss -- something unheard of today because very few claims ever make it through the legal system.

Under the Patients' Compensation System proposal, if a patient were harmed, he would file a claim to a panel of health care experts. If the panel found a "medical injury" had occurred, the injured person would be compensated -- similar to what we see with workers' compensation systems. The patient would receive remuneration no different than under the current, adversarial legal system, but in much less time -- months instead of years.

The benefits of the Patients' Compensation System's benefits to taxpayers and patients are tremendous. According to the independent health care economics firm BioScience Valuation, during the first decade under the Patients' Compensation System, physicians would stop practicing defensive medicine, which would result in $3.1 billion in savings for Georgia taxpayers in Medicaid costs alone. In Florida, the firm found a savings of $16.8 billion to state taxpayers for Medicaid over the first decade if the state adopted the system. There also would be tremendous savings in private health plans as well.

Patients and families who may have been harmed by a doctor would also have greater access to justice. An Emory University scholar found about half of trial lawyers across the nation refuse to take cases unless damages are $500,000 or greater. Under a Patients' Compensation System, all patients who have been truly harmed would be compensated, and no less than under the current litigious system.

The system would not require a tax increase, but instead would be funded by malpractice premiums paid by providers. As litigation disappeared, we would start to see savings. Trial lawyers and malpractice carriers, who both make tremendous profits off the current system, oppose the concept.

As governors and state lawmakers have seen since the president signed Obamacare into law, solutions can really be found in the states. The proposed Patients' Compensation System -- if adopted in all 50 states -- could save our health care system $2.6 trillion over 10 years. Georgia and Florida are leading the way to do what Obamacare hasn't -- reduce health care costs by replacing our very broken medical-malpractice system.

Wayne W. Oliver is executive director of Patients for Fair Compensation.

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