Malpractice liability costs U.S. $55.6 billion: study

WASHINGTON Tue Sep 7, 2010 1:36am EDT

A pregnant woman stands on a scale before receiving a prenatal exam at the Maternity Outreach Mobile in Phoenix, Arizona October 8, 2009. . REUTERS/Joshua Lott

A pregnant woman stands on a scale before receiving a prenatal exam at the Maternity Outreach Mobile in Phoenix, Arizona October 8, 2009. .

Credit: Reuters/Joshua Lott

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WASHINGTON (Reuters) - Medical malpractice liability costs the U.S. healthcare system more than $55 billion a year, most of it in "defensive" medical practices such as extra tests and scans, according to a report released on Tuesday.

These costs, which also include administrative costs, payments to plaintiffs and lawyer fees, account for 2.4 percent of annual U.S. healthcare spending, Michelle Mello of the Harvard School of Public Health and colleagues reported.

So-called defensive medicine costs alone totaled an estimated $45.6 billion, Mello's team reported in the journal Health Affairs.

The issue of malpractice has repeatedly come up in discussions and debates over healthcare reform. Doctors often must carry hundreds of thousands of dollars a year in malpractice insurance.

The administration of President Barack Obama has made saving money a centerpiece of healthcare reform, Obama's signature domestic policy.

"We cannot debate the potential for medical liability reform to bring down health care costs in any meaningful way without realistic cost estimates," Mello said in a statement.

"Physician and insurer groups like to collapse all conversations about cost growth in health care to malpractice reform, while their opponents trivialize the role of defensive medicine," added Amitabh Chandra, a professor of public policy at Harvard's Kennedy School of Government who worked on the study.

"Our study demonstrates that both these simplifications are wrong -- the amount of defensive medicine is not trivial, but it's unlikely to be a source of significant savings."

Many groups have suggested tort reform as a solution, including caps on damages to be paid in successful malpractice suits, but Mello's team said such reforms would be unlikely to cut overall healthcare spending much.

Total malpractice indemnity payments were $5.72 billion a year in 2008 dollars, Mello's team found -- about $5 billion in actual damages and less than $2 million in punitive damages.

But they noted there is no comprehensive system for tracking such damages, either. "The source that comes closest is the National Practitioner Data Bank of the Health Resources and Services Administration (HRSA)," they wrote.

They used that databank, with estimates from other sources, for their report. They used published studies for other numbers in the report.

"Notably missing from this list are malpractice insurance premiums," Mello's team noted.

"Premiums represent insurers' best estimates of their indemnity costs and defense costs, plus additional amounts to cover other operating expenses, reinsurance costs, and profits or surplus building. It would be double counting to include both malpractice premium costs and indemnity and administrative costs."

(Reporting by Maggie Fox; Editing by Eric Beech)

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Comments (8)
KimoLee wrote:
Doctors are human and when they mess up, people die. Still, most American doctors make a very decent living and don’t complain about being “underpaid.” Actually, I have a doctor friend that complains about the drug companies pressuring him to sell new drugs to his patients when older, more effective, generic drugs are available. AND nobody talks about how much THAT costs Americans and how greedy it is. WE HAVE A VERY, VERY, VERY BROKEN SYSTEM.

Sep 07, 2010 1:06am EDT  --  Report as abuse
Majick1 wrote:
MONEY – that’s what runs the Health Care System in the US. Look at your TV and pick your favorite drug, it doesn’t matter if it works, death is now a “side effect”.
It is illegal to give a kick-back to doctors for prescribing a particular drug so why do they still prescribe them. MONEY!
Malpractice can happen in ANY profession but it does the most damage in the Medical profession. Once is an accident, twice is unforgivable and that doctor should be relegated to strict supervision and not be allowed to engage in surgical or other life-threatening duties. The third time he should not be allowed to practice in the US at all.
There are “Doctors”, most notably in the Cosmetic Surgery field, who mutilate patients on a daily basis. They close up shop when they get sued and move to another state to start all over again. We need to see that bad doctors are permanently removed from the system and the MONEY that good doctors get is for their good work and diligence.
We also need to correlate damage awards to a more reasonable level to reduce expenditures for doctors and insurance companies. A sponge left in a patient is not worth millions of dollars. It is not life threatening so take it out at no charge, pay the patient’s expenses and lost work time and give him a thousand dollars a day from the day of admission to the day he returns to work for his trouble.
The system is broken but no one in power cares to change it because of the MONEY! It is legal to bribe officials in the US if you call it PAC or Special Interest Lobbying Funds. Get rid of that and we stand a chance of real change. Think anyone will give up their MONEY!

Sep 07, 2010 10:23am EDT  --  Report as abuse
Adam_S wrote:
Start running healthcare like a public service, stop running it like a business. Problem solved. Next stop: higher education.

Sep 07, 2010 12:37pm EDT  --  Report as abuse
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