Report: Healthcare costs not driven by malpractice awards

Caps on awards and efforts to restrict malpractice litigation have reduced  the number and dollar amount of malpractice payments on behalf of doctors, but have had virtually no impact on slowing the growth of healthcare costs, according to a new report by the consumer watchdog group Public Citizen.

According to Taylor Lincoln, director of Public Citizen’s Congress Watch division, the report disproves claims by some Congressional leaders made during the debate preceding passage of the Affordable Care Act that malpractice litigation and defensive medicine practices were the biggest cost drivers in the nation’s medical bill. 

The report finds that malpractice payouts have fallen each year since 2003, and in 2012 reached their lowest level ever, setting a new record low for the sixth consecutive year.

Similarly, last year was also the third consecutive year in which the cumulative value of malpractice payments fell to the lowest level on record for the third consecutive year, when adjusted for inflation. Meanwhile, overall healthcare expenditures have risen by more than 58% since 2003, the report states.

“The divergence between healthcare costs and medical malpractice litigation affirms what critics of imposing malpractice litigation restrictions have said all along: That litigation is not to blame for rising costs or inadequate access to care,” Lincoln writes.

The report singles out Texas, where malpractice payments have declined by about 65% since the state passed one of the nation’s most restrictive malpractice litigation laws in 2003. A 2011 Public Citizen study found that healthcare costs in Texas, especially Medicare diagnostic testing expenditures, rose faster than the national average between 2003 and 2010, thus severing the link between litigation fears and defensive medicine practices.

“What’s most significant today is that physicians in Texas….now disagree with the proposition that medical malpractice limitations are the key to controlling costs,” Taylor writes.

Rather than focusing on malpractice costs, the report suggests that those wishing to slow the growth of healthcare spending should look to the rapid increases in compensation paid to medical specialists and top executives at major hospital systems, which have far outpaced inflation in recent years. 

For more on the pros and cons of tort reform, see “Who benefits from tort reform?” in the August 10, 2013 issue of Medical Economics.