A new report on “Judicial Hellholes” arrives just in time, albeit indirectly, to remind Congress that no health-system changes can qualify as real “reform” if they don’t include serious lawsuit reforms as well.
The annual report by the American Tort Reform Foundation, released Dec. 15, shows that President Obama’s own Cook County, Ill., is the nation’s third-worst place for lawsuit abuse. Maybe that helps explain why Obamacare, especially as translated by House Speaker Nancy Pelosi, discourages lawsuit reforms rather than promoting them.
For instance, the Pelosi bill punishes states if they implement the most effective tort reform of all, namely a cap (or limit) on the amount of “non-economic damages” such as ever-vague “pain and suffering” awards. It also has a section (257) that encourages even more speculative lawsuits that in turn drive up health insurance premiums.
These issues are important not just for health care, but for the overall economy. As the “Hellholes” report notes in its executive summary, “Not coincidentally, the local or state economies in many of these ‘Hellholes’ jurisdictions have suffered more than most during the latest recession.” Conversely, doctor availability, health care outcomes and economic growth all directly followed constructive lawsuit reforms in places like Texas and Mississippi (although some counties in Mississippi remain lawsuit nightmares).
Even Alabama, long among the worst of the Hellholes and even now on the borderline Hellholes “Watch List,” made noticeable economic strides earlier this decade that seemed to coincide exactly with the success of some moderate tort reforms.
In October 2008, the Department of Commerce released a report noting that lawsuit costs as a percentage of gross domestic product are two to three times higher in the United States than in other developed nations. This report cited several major studies that show variations on the theme that “European companies doing business in the United States rank ‘fear of legal liability’ among their top concerns.”
On the other hand, when lawsuit reforms are instituted, the situation almost immediately becomes less damaging. The Manufacturers Alliance and the Manufacturing Institute report that after President George W. Bush signed into law the Class Action Fairness Act in February 2005, annual American business tort costs dropped nearly 8 percent in 2006. These sorts of things make a huge difference in whether American businesses are competitive or not and thus how many people they can hire and how many workers’ health care they can subsidize.
All of that leads us back to the “Judicial Hellholes” report for 2009-10: It’s well worth a read. It shows that if you live in South Florida, West Virginia, the aforementioned Cook County, Atlantic City, N.J., New Mexico or New York City, your abusive lawsuit system is probably hurting your economy. That’s all the more reason for your congressional representatives to refuse to vote for any government health care proposals that, like the House version of Obamacare, make lawsuit abuse even worse.