When President Obama addressed Congress and the nation on the need for health-care reform, he brushed off medical malpractice lawsuit abuse with a cursory acknowledgment of the problem. He said he doesn’t think it’s a “silver bullet” but has directed Health and Human Services Director Kathleen Sebelius to “move forward” on it.
With all due respect, that doesn’t cut it. Medical malpractice should be a central tenet of this massive health-care overhaul. Brushing the problem aside only inflates the $900 billion needed to pay for the reforms over the next decade.
The president and his faithful love to batter the insurance industry. It is a convenient target, and anyone who has had a claim rejected can identify with that approach. No one bothers to talk about the good points about insurance and where we would be without it.
At the turn of the 20th century, fraternal organizations formed insurance programs to cover widow and children when workers died. Over the years, insurance companies came into play and developed reserves to pay claims. When disasters strike, some personal injury lawyers view those same reserves as “deep pockets.” They collect their 30 percent contingency fees, and those who sue can get what’s left after fees and court costs.
Don’t get me wrong: Attorneys are needed and perform a valuable function in our society. The law is complicated, and our society’s problems are complex. Making sure citizens’ rights are protected is essential. So is fair and just compensation for injured people.
The problem the president fails to address is that our legal system is too costly, and despite objections from the well-heeled personal injury lawyers, it must be fixed. The bottom line is there will be no meaningful health-care reform that we can afford without changes in medical malpractice laws.
Richard Epstein, a University of Chicago law professor, believes one way to offset some of the costs is to change the country’s medical malpractice laws, something President Obama declined to endorse when he met with the American Medical Association earlier this year. Epstein wrote in the Wall Street Journal that litigation in the U.S. has at least four distinctive procedural features that drive up malpractice costs. They include:
1. Jury trials, which can veer out of control and, at a minimum, introduce significant uncertainty.
2. The contingency-fee system, which allows well-heeled lawyers to self-finance litigation.
3. The rule that makes each side bears its own costs. This encourages more frivolous lawsuits than in most other countries, such as Canada, England and most of Europe, where the loser pays the legal costs of the winner.
4. Extensive pretrial discovery outside the direct supervision of judges, which occurs far more readily here than elsewhere.
Make no mistake, medical malpractice litigation is big business in the U.S. Collectively, trial lawyer advertising budgets rival those of breweries, soft drink companies and male enhancement pharmaceuticals.
Television advertisements alone soliciting plaintiffs for medical malpractice lawsuits increased from about 10,150 ads in 2004 to more than 156,000 ads in 2008—nearly a 1,400 percent increase in four years, according to a new study released by Campaign Media Analysis Group. The study showed that spending for these ads increased from $3.8 million to nearly $62 million during this time period—a 1,300 percent increase in 2008-adjusted dollars.
Without medical malpractice reform, paying for health care will only become a bigger problem. Once the insurance companies are gone, the government becomes the “deep pockets”, and taxpayers will be saddled with paying the lawyers’ fees.
So, what about medical malpractice reform, Mr. President?
Don Brunell is the president of the Association of Washington Business.