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Three Myths About Tort Reform

— October 30, 2014

Tort reform has sullied the political landscape of this country for years.  A set of proposed laws and regulations at both the state and federal level, one central aim of tort reform is to limit the compensation an injured party can recover in a personal injury lawsuit, or “tort,” attempting to “save” health care from supposedly frivolous lawsuits.  Proponents of tort reform assert that these limits, or “caps,” on damages will increase patient safety, reduce healthcare costs, and attract doctors to states where such laws are in effect.

As we will see here, such assertions are patently false.  In truth, insurance industry lobbyists have funded wide-scope advertising campaigns to spread the myth that injury lawsuits are predatory, insidious, and frivolous, citing junk research to support false claims of economic and sociological benefit from tort reform.

First, the idea that caps on damages will lead to increased patient safety.  A 2014 study from Northwestern University titled “The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform” found that the opposite was true. The authors state, “analyses of five states that adopt caps on non-economic damages during 2003-2005, we find consistent evidence that patient safety generally falls after the reforms, compared to control states.”

This article concluded that “reduced risk of med mal litigation, due to state adoption of damage caps, leads to higher rates of preventable adverse patient safety events in hospitals”, stating that their study was “the first, either for medical malpractice or indeed, in any area of personal injury liability, to find strong evidence consistent with classic tort law deterrence theory – in which liability for harm induces greater care and relaxing liability leads to less care. The drop in care quality occurs gradually over a number of years following adoption of damage caps.”

Next, the myth that caps on damages will decrease healthcare costs.  This is false – again, a study published October 16th, 2014 in New England Journal of Medicine found that the opposite is true, and that caps on damages actually increase overall healthcare costs.

That study showed that states with tort reform laws on the books see no increase in Medicare Part A spending, but a 4-5% increase in Medicare Part B spending, largely because with reduced liability, doctors become more likely to perform higher-risk and more costly procedures.

Lead author Daniel A. Waxman, M.D., Ph.D writes there is “no evidence that adoption of damage caps or other changes in med mal risk will reduce healthcare spending. Instead, we find evidence that states which adopted [caps] during the third wave of med mal reforms have higher post-cap Medicare Part B spending. … There is no evidence that limiting med mal lawsuits will bend the healthcare cost curve, except perhaps in the wrong direction. Policymakers seeking a way to address rising healthcare spending should look elsewhere.” (emphasis added)

Lastly, we will dispel the myth that states with tort reform laws will attract doctors, a claim that is simply false.  A team of researchers from Northwestern University School of Law and University of Illinois College of Law wrote in a 2014 study titled “Does Medical Malpractice Reform Increase Physician Supply? Evidence from the Third Reform Wave”, “[W]e find no evidence that the adoption of damage caps increased physician supply in nine new-cap states, relative to twenty no-cap states. …

Consistent with this analysis, we also find no association between med mal claim rates and physician supply in state and county fixed effects regressions over 1995-2011…

Physician supply does not seem elastic to med mal risk. Thus, the states that want to attract more physicians should look elsewhere.”

We might ask, “Without clear evidence of economic or social benefit from tort reform, why are these laws proposed?” The answer is simple: insurance companies benefit hugely from decreased litigation and liability.

For more information on tort reform, follow the links and video below.

What is tort reform, anyway?

Tort Deform

VIDEO: “In Texas, No Justice for Injured Patients” – Center for American Progress

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