Medical liability tort reform and health care payment

Yesterday, Charles Krauthammer's column was again slamming on "Obamacare." (Does anyone else think the Republicans might be very sorry they suggested that nickname for a program that could eventually be as popular as Medicare?)

I won't deal with his assertion that the Reagan tax reforms created tax savings and propelled a 20 year economic boom. I seem to remember Ross Perot's political career being based on the spiraling federal deficit that resulted from those reforms, but I'll leave that to more knowledgeable economists.

But I can speak on the issue of medical liability tort reform. To those unfamiliar with the system, it's a mess. Vast sums of money go to lawyers defending cases which 90% of the time are won by the doctors anyway. The system is fueled by the fact that when a plaintiff wins, the amount may be so astronomical that it offsets a lot of other lost cases for the law firm.

The problem is that there is little rhyme or reason to who wins or loses. Very deserving plaintiffs often lose, because if it were that easy to prove doctors incompetent, it would be easy to get them out of practice. Meanwhile, patients whose bad outcomes are the result of bad luck, their own failure to follow doctors' recommendations, injuries caused by uninsured third parties, etc., may win huge judgments against doctors who did nothing wrong.

Krauthammer's solution is to create a government agency that would review alleged cases of malpractice and award compensation from a pool funded by taxes on health insurance benefits. He feels that will solve the problem by removing the lawyers from the system.

Now, I'm all in favor of tort reform and removing the lawyers. But it's a bit Pollyanna-ish to think this sort of single-payer system will do it. (Did I just call Charles Krauthammer a Pollyanna?)

If you want to see how such a system would work, look at Social Security Disability and SSI. Not only are lawyers involved, a cynical person might say the Social Security Administration uses the presence of a lawyer as a test of the worthiness of an application -- "If you can't get a lawyer to take your case, it probably isn't worth our time, either." The system is widely regarded as coming up with inexplicable outcomes as far as who is awarded benefits and who isn't.

To deal with the medical liability mess, you have to look at the economic pressures fueling it. People who are gravely ill often have no insurance, because they lose their jobs. Medicare doesn't kick in until there have been two years of total, permanent disability. Medical assistance requires you to spend all your assets, and the state will probably put a lien on your home if you own it. Very few people have long term care insurance, and private disability insurance is often not what it's cracked up to be if you try to file a claim.

Meanwhile, the cost of medical care is priced in funny-money, because insurers refuse to pay the full cost -- they demand a discount, or they will send their insured members elsewhere. Meanwhile, uninsured people often can't or won't pay at all, and the prices are jacked up to offset the charges that are written off, which means even more people can't pay. To give you an idea of how crazy it has gotten, my recent one-day hospital stay and surgery generated a $56,000 bill, but the hospital accepted the insurer's contracted payment of $8,000.

So when a case goes to trial, a jury knows the plaintiff with a catastrophic medical condition may be facing the loss of his home, retirement savings, and children's educational savings. Once he goes on medical assistance, he may still have difficulty obtaining care, because medical assistance payment rates are so far below Medicare and private insurers that most doctors don't accept those patients. (No one ever lost an election by failing to look after the interests of welfare patients, so the payment rates have diverged widely over the years.)

Until you eliminate the problem with inequitable access to health care, juries are going to be sympathetic enough to hand out other people's money to plaintiffs whose injuries are nobody's fault. Shifting it to a government agency isn't going to help much, because the average person doesn't have the skills to prove that malpractice occurred without a lawyer and a lot of expert witnesses involved. If making false claims to the state board and getting a doctor's license revoked makes it easier to be awarded benefits, a lot of people will be desperate enough to do that, no matter what the consequences of removing doctors from practice will be on their community.

You have to remove the desperation before you can solve the problem. Health care reform is a prerequisite to tort reform, not a result.