POLITICS: Denny speaks, sort of

Who’s Denny Hastert? He’s my favorite politician. I regularly ask this question at parties, among college educated yuppies in San Francisco.  Frequently NO ONE knows — and I am not joking. Incidentally by my recollection of the constitution, he’s number 3 in line to the nuclear codes. Funnily enough he even has some limited power and influence running around after Tom Delay, and he thinks about health care, believe it or not.

What does he think about about health care? Funnily enough he too believes that the main problem in the country is that of the uninsured.  And we’re going to solve that by reducing malpractice costs, or at least I think that’s what he said…maybe it was AHPs and getting the state out of insurance regulation…yes that’s it, that’ll work! After all all those AHPs and cross-state individual plans are going to really help contain costs, and get sick people into easily affordable insurance plans — especially after we’ve driven out the 0.5% of the cost of the system that malpractice causes.

More perhaps on this later, or perhaps we’ll leave that discussion to Jon Cohn. About time I got him back, and I know he’s thinking about it

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  1. Yeah, it’s no question that there’s tons of litigation out there. I used to run a credentialing department for an MBHO. Rare are the psychiatrists who haven’t been named in a lawsuit.
    It is possible that because the studies on payouts don’t take into account legal costs to keep payouts down that maybe their expenses are going up along with the premiums. If that’s the case, they’re making a very poor argument of it, because even PIAA doesn’t mention it.
    I would be amenable to reforms where if the judge determines a case to be frivolous that the plaintiff’s attorney is responsible for paying the defendent’s legal expenses if the plaintiff is working on contingency. If the plaintiff’s attorney is not working on contingency, then the plaintiffs themselves are responsible for those expenses. To be honest, I don’t know enough about the state of tort reform to say if laws like this currently exist.
    One thing I do not like to see is caps on awards. Punitive damages are important because they make people think twice before they act. I know we all like to think that every doctor is trying his hardest to be good and all, but having worked in credentialing and read some of these cases, I know this is not always the case. Truly negligent doctors exist and should be punished. How do you put a cap on damages in the case of a negligent doctor whose behavior directly led to a suicide? I would rather trust the legal system.
    Also… if the increase in costs is due to increases in legal fees, caps on awards shouldn’t have an impact. Other reforms are what’s needed.

  2. Spike- I can appreciate and understand your skepticism. Though I certainly share the sentiment of “absolute power corrupting absolutely” (ie. industry monopoly or near monopoly)– I think the medical mutual companies have no motive. I can say this because the physicians who tend to be more influential in these companies would be more likely to be further along in their career– they would be unlikely to see any benefit in engaging in a many year political game of chicken– and cost themselves hundreds of thousands of dollars.
    The most important thing to understand about the award/ premium ratio for a givenyear is that there is no relation between the two. Remember that the premium paid in 2005 pays for events that may have happened 5 or more years ago. A variety of factors go into predicting future awards– not the least of which is payout trends and possible liabilities. Also never counted in these reports are the costs of defending against suits and the costs of frivolous lawsuits. (Frivolous defined as being thrown out by a judge for having no merit.)
    In Arizona- the costs to MICA (the state’s largest medical liability insurer- and a mutual company) for frivolous lawsuits alone went from $5 million in 2004 to an estimated $8 million for this year. Defense costs for 2005 will be over $20 million. All this to cover events that occurred at some point in the past.

  3. What I want to see is evidence that the reason malpractice insurance premiums went up is because of higher payouts.
    I know that malpractice insurance premiums have gone up. I know that this causes problems for doctors. What hasn’t been proven is that an increase in malpractice awards is responsible for the rise in premiums, mainly because there hasn’t been an increase in malpractice awards.
    Why are the premiums going up? I don’t know. If you were part of an oligarchy and could raise rates whenever you wanted and get away with it, wouldn’t you? Is it even conceivable that the malpractice insurance industry is intentionally raising premiums to create a political climate friendly to caps on awards? Wouldn’t you do that if you could get away with it?
    All I want to see is some evidence of an increase in malpractice awards. None of the data provided by a lobbyist came close to providing data to support a 100% increase in premiums.

  4. spike- I will respond to your comments, but first: >why is our government so insistent on taking the decision out of their [people’s] hands?<
    I can safely presume that you are not in favor of single payer healthcare, where government agencies decide what is in your best interests for healthcare…
    The data that there is a "crisis" in medical liability (remember that malpractice implies wrongdoing- something that the current system has only a passing interest in) comes in many forms. However, I continue to ask you to answer the questions (and statements) from above- they are directly related to medical liability. What are you trying to achieve with a medical liability system??
    Deterrence of bad behavior? Compensation for patients injured by a failure to treat according to a standard of care? Compensation for bad outcomes? Compensation based upon evidence supported by science? Timely compensation? Let me know what the system is- to use your word- "important" for?
    It is true that there have been times in the past that medical liability costs to physicians have been high– however, in the past, these cost could at least be in part passed on to the consumer. Before you get angry, think about any other business– when costs go up every year– there are only a few possibilities– 1. pass on costs to consumers, 2. reduce business costs (fewer services, less staff) 3. reduce profits until you go out of business. In healthcare, costs go up every year, in part due to federal regulation. Medical liability costs are soaring. Just to keep up with federal regulations, it can be nearly impossible to reduce staff. Since nearly all reimbursement has ties to Medicare- costs can no longer be passed along to consumers (patients). So we have situation #3– profitability is being squeezed to where it does not make sense for many doctors to stay in business.
    One solution to the problems in medical liability costs would therefore be to allow doctors to just pass on their costs of doing business to their patients- a solution with little likelihood of occurring for so many reasons, good and bad.
    I do not think you will be swayed by statitstics or anecdotes– give me some sense of how I might convice you that the current system is broken?

  5. >doctors and systems would have to commit to practicing evidence based medicine.<
    What makes you think that would be cheaper? Most of the cheap "alternative medicine" payers are pushing and patients are demanding, have zip evidence supporting them, and certainly none of the randomized placebo-controlled double-blind studies the payers demand for anything expensive.
    And, how would such a "commitment" be enforced? Once you've determined how to enforce "commitment", why not just have doctors "commit" to practicing "good" medicine, and then the malpractice problem will disappear. Right?

  6. haha, whoops, that first line should read “Actually, *not* everybody….”

  7. Actually, everybody can produce data to support their view. My point was that PIAA, the lobbying organization you linked to in support of your argument, couldn’t. Their data didn’t make a case at all.
    And now you’re talking about the justice of the tort system as a whole, instead of just the malpractice industry. I don’t feel like engaging in that one. I don’t think it’s perfect, but I think it’s important. I also think that caps on jury awards are stupid, just like mandatory sentencing for drug crimes are stupid. We have all these bright people in our country, why is our government so insistent on taking the decision out of their hands? But again, that’s beyond the scope of the argument.
    You try to present some actual evidence that the malpractice “crisis” is real. I’d love to see it. Saying that payouts increased by 3 times the rate of inflation really doesn’t cut it.

  8. Spike- let’s move past the fact that both sides can produce data to support a point of view. Let’s return to some of my basic points above: if medical liability underwriting is such a cash cow for insurers, why are there so few in so many states? Also- my liability premiums would come back to me if there were “profits”– just like they would to any policy-holder in a mutual insurance company.
    But, let’s move away from caps for the moment– where is the justice in a system (present in most states) that if you are found 1% responsible, you should pay 100% of the bill if you have more resources? Where is the justice in a system that has between 60-70% of the total recovery go to attorney fees? Where is there justice in a system where the severity of the problem (eg. cerebral palsy) is more important than the science and evidence of wrongdoing? Where is the justice in a system where if a lawsuit filed in one county is likely to have a jury award that is 2 times that of another county in the same state?

  9. The PIAA website has some pretty laughable data in their rebuttal. Their main claim is that the number of $1 million and above payments doubled from 1997 to 2001. $1 million is a completely arbitrary number that has no relationship to anything, it just happened to be a benchmark that was surpassed during those 4 years. If there were 10 payments of $990,000 and 1 of $1,000,000 in 1997, and 9 payments of $990,000 and 2 of $1,000,000 in 2001, that is almost no difference. These guys are trying to say it’s a huge effect.
    Second, they make a big deal about how malpractice awards have risen by 3 times the rate of inflation. Well, that’s still less than the rate of increase in healthcare spending over the same period. So that’s actually growing at a slower rate than overall healthcare spending, but the PIAA wants us to believe it’s a main driver?? Uh… ok. Aside from that, Center for Justice and Democracy says that malpractice premiums were rising at about 35 times the rate of inflation.
    I don’t know enough about who owns the malpractice industry, whether it’s made up of physician owners or what, but the best data PIAA can come up with is all a bunch of bull, so it’s clear that they’re gouging the physicians for some reason.
    Did it occur to you that the reason they’re able to raise premiums (and make huge profits) is because the president, the speaker of the house, and more than half the political influence in the country is ramming it down our throats that the Malpractice Insurance industry has to raise rates to keep up with out of control torts? By PIAA’s own data, the torts are nowhere near out of control.

  10. No other indutrialized nation allows for the out of control jury awards– not based on any evidence in many cases– like the US.
    The most recent study that was published –http://www.centerjd.org/– from the center for justice and democracy, and quoted widely in the media– was written by an organization dedicated to fighting tort reform. It is extremely flawed. I refer you to http://www.thepiaa.org/ to see the flaws.
    While it is true that investment losses have an impact on insurance costs– why have we not seen similar cost increases in home, auto, and life insurance?
    Also- many of the largest medical liability insurers are mutual companies– owned by the physicians themselves– what motive would these companies have to gouge themselves– I certainly see no benefit in paying more than the average US household income each year just for liability insurance (and in many cases multiples of that)?!
    Also, if insurers were making such a financial windfall from medical liability underwriting, why are there so few choices for medical liability insurance in most states compared to auto, home and life insurance?
    Defensive medicine costs money– whether it is $50 billion as some claim or somewhat more or less does not matter. Fear of liability does increase costs to the system– spend an hour in any emergency room or private or public clinic or office.
    How would you fund your no fault system? It certainly would be more predictable- like workers’ comp- but as Californians know, it certainly is not necessarily cheaper. Would you deny a “jury trial”? Would you have judges or medical experts decide? I personally believe that some form medical courts are the answer— and I have the general counsel for Common Good (www.cgood.org) on my program on the 28th of August— I think it will be interesting and add to the debate…

  11. Eric, you seem to have missed the article in last months Health Affairs which showed that malpractice payouts were equally substantial in some of those socialist Utopias/slave states you fear so much. The URL is http://content.healthaffairs.org/cgi/content/full/24/4/903
    I am in favor of scrapping the current malpractice system, and mving to no-fault system in which doctors and systems would have to commit to practicing evidence based medicine. But I have not seen any concessions from the AMA other than to ask for caps on damages. Oh, and we already have caps on damages out here in California, and I haven’t noticed my health insurance premiums going down 10% a year.
    What is fraudulent is the Republican position put out by Bush during the election and Hastert here that malpractice is a major portion of the reason for high medical costs. That is just flat out wrong. But if you repeat a lie often enough….

  12. But don’t insult our intelligence by linking the rate increases in malpractice insurance with increases in malpractice payouts. The number of cases and $ amount of payouts has remained constant for the past decade. There’s plenty of evidence which shows that the reason insurance premiums are going up is because the malpractice insurance industry lost money on investments during the past several years and had to raise rates to cover their losses.
    Everybody agrees on the problems caused by high malpractice insurance costs, but the source of those high costs are where we disagree. The facts show that tort reform won’t fix anything except help the malpractice insurance industry line their pockets further.

  13. Please do not confuse your readers by using the “0.5%” number. Those costs are borne by the physicians (and institutions) who actually provide care. The chilling effect that medical liability costs and fears have had on ACCESS to care is very significant. Emergency rooms do not have specialty coverage, whole counties in Arizona do not have a single OB/GYN, patients have been transferred from Tuscon to Phoenix because no one is on call to take care of hand emergencies, people who have had previous back and joint operations cannot find anyone who will even give them an appointment– all in large part due to liability costs and risk.
    In the utopian single payer system that I have never seen a single detail about– other than the creation of new government agencies- how would you address the simple fact that you cannot force physicians to work to see anybody and everybody– at the state created rate (ever decreasing), with increasing liability risk in a system without limiits– unless you in effect legislate control over the doctors (eg enslave/ employ)?