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Malpractice Litigation As A Source of Rising Health Care Costs

Health insurance costs and the costs of health care services rose dramatically in the 1990s. Conservative activists have tried to blame this increase in costs on rising costs related to medical malpratice litigation. While this theory is plausible on its face, it is not supported by the facts. Malpractice expenses make up just 0.5% of U.S. health care costs. Even in states like Colorado where tort reform and a variety of other changes in the market place have caused malpractice insurance premiums to fall 60% in real dollars between 1988 and the present, where tort trials are less common and where inflation adjusted awards have fallen, health care expenditures have doubled (or even increased more so) in the past decade.

States with medical malpractice damage caps actually see more malpractice insurance premium increases than states without them, and the impact of large non-economic damage awards on premiums is less than 1% of the amount paid according to insurance industry sources. Utah, for example, which has strict caps on non-economic damage awards ($250,000) in medical malpractice cases, had the second highest increase in malpractice insurance premiums since 1991. According to a 2003 study by insurance industry analysis firm Weiss Ratings Inc.:

• Insurers in states with caps raised their premiums at a significantly faster pace than those in states without caps - 48 percent compared with 36 percent.
• Despite the imposition of caps, insurers in nearly nine of 10 states continued to raise rates, while insurers in states without caps were actually more likely to hold or cut their premiums.
• In states with caps, insurers are more likely to charge premiums exceeding the national median than those in states without caps.

Indirect "defensive medicine" costs, to the extent that they have driven higher medical costs are also not, as often alleged, primarily motivated by fear of medical malpractice litigation. The Congressional Budget Office (controlled by Republicans in Congress) has stated that "so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefit to patients."

In short, rising health care costs are not the fault of lawyers who seek redress for the professional negligence of doctors. This is simply a widely held urban myth shared by many in the medical profession, who dislike being sued in general.

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