Making It Easier for Doctors to Get Away with Malpractice Is an Insane Way to Cut the Deficit
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It was just a lone sentence tacked on to the very end of a long New York Times article. The story focused on a recent report from President Obama's bipartisan commission on reducing the national debt. "Panel Seeks Cuts in Social Security and Higher Taxes" was indeed about cuts in Social Security and proposed tax increases -- the things most pundits jump on. But the last sentence caught my eye: "[The commission plan] would limit malpractice awards, long a Republican goal."
Huh? What has limiting malpractice awards -- and all but doing away with them if you read the fine print -- got to do with the national debt?
Well, reducing the national debt means cutting government spending. Government spending includes Medicare. So the debt commission wants to cut Medicare spending by curbing reimbursements for doctors, a goal that goes back more than a decade.
Under an amendment to the 1997 Balanced Budget Act (the brainless child of the Newt Gingrich era), Medicare rates for physicians and other providers are calculated under a complex formula intended to prevent physician compensation from rising above the rate of growth in GDP each year. It has resulted in cuts so unpopular that Congress annually postpones them by passing a moratorium on the increases -- known as the "doc fix." Without that action, the accumulated cuts would be over 20 percent by now, since the basic legal requirement remains.
The report says we need a permanent "doc fix," so doctors won't have to hold their collective breath over Medicare reimbursement fees, and so elders won't have to worry that their doctor will no longer see them due to too-low reimbursement rates. Somehow, the bipartisan panel progresses from calling for "malpractice reform" on page 8 of its report to calling for "paying lawyers less" on page 32, before the grand finale: " Enact Comprehensive Tort Reform," in bold on page 33.
Huh? Yes, it's really, really, hard to parse the reasoning. But here goes: Doctors need to be paid. Most physicians take Medicare patients. Medicare pays them on a fee schedule determined by Medicare, which is already less than fees for other patients. Doctors also carry insurance in case they amputate the wrong limb or leave a sponge inside your abdomen and get sued for malpractice.
Malpractice insurance, particularly if you engage in actual malpractice, costs big money. If we could lower insurance costs by doing away with malpractice awards, doctors' overall costs would decline. They would then be happy with cuts in Medicare reimbursement, since they could continue charging higher rates to non-Medicare patients anyway. This would save the government money.
Doing away with malpractice awards is such a good idea that we should continue with getting rid of all awards for corporate misbehavior. (We've left the doctors behind now, but stick with me). Therefore, we get rid of jury awards for any kind of corporate misbehavior on page 33 with Enact Comprehensive Tort Reform. Presto-change-o, the national debt is magically reduced.
W-a-i-t-a-minute. How'd we get from there to here? According to Forbes reporter Daniel Fisher, tort reform is "A catchall phrase for legislative measures designed to make it harder for individuals to sue businesses." Eliminating punishment for corporate misbehavior means scuttling the possibility of lawsuits for little indiscretions like putting drugs on the market that kill people, selling E coli-laced hamburgers, pouring toxic waste into groundwater, and knowingly manufacturing cars with defects that cause fatal accidents.
"Long a Republican goal," indeed.
Using Medicare savings to gut corporate liability through tort reform is a hell of a neat trick if you can get away with it. I believe the Greeks used a similar method to enter Troy.