Opinion: Medical liability still causes problems for Michigan and America

Lawrence J. McQuillan and Hovannes Abramyan

A report released earlier this month by the Michigan Medical Physician Coalition estimates that in three years the state will have a shortage of up to 6,000 critically needed doctors. Among the causes of this shortage are costs associated with medical liability.

The basic facts about America’s medical liability crisis are well known — doctors are being forced to relocate or retire, hospitals and clinics are closing, medical services are being slashed, and patients are being deprived of vital care.

It’s also well known who’s profiting from the situation — personal-injury lawyers. Less understood, however, are the financial burdens caused by abuses in medical liability litigation. Exactly how much are these abuses costing our country?

The answer is shocking. Lawsuit abuse raises health-care costs in the United States by a staggering $124 billion a year. That’s the same size as the Iraq war supplemental bill just passed by Congress. In other words, the constant threat of medical liability lawsuits exerts a monetary cost to our country comparable to sustaining a war.

And that’s just the health-care cost. The total cost of the tort system is about $865 billion a year. To put this number into perspective, it’s a staggering 30 times what America spends through the National Institutes for Health to find treatments and cures for the most deadly diseases.

In Michigan, the situation is a little more positive. The state has model damage caps and relative liability costs that are lower than in most other states. However, state legislators sympathetic to the trial bar have been trying to repeal medical malpractice tort reforms since their enactment more than 10 years ago.

If successful, these changes would worsen the impending shortage of physicians and cause remaining doctors to behave in economically inefficient ways.

Fearing litigation, doctors across the country have resorted to defensive practices. They order far more costly tests and procedures — and make more specialist referrals — than their expert training would deem actually necessary.

The needs and interests of their patients aren’t driving doctors to perform these extraneous services. They’re simply protecting themselves from potential lawsuits brought on by predatory tort lawyers.

Here’s a typical case: A patient in the state of Washington suffered a broken jaw while working at a construction site. Despite a clear and straightforward diagnosis to that effect, emergency-room doctors ordered a battery of tests, including CAT-scans and MRIs, to cover themselves from potential liability.

In all, the additional costs of these “lawsuit-prevention” tests came to about $20,000. Multiply the cost of this single case across the entire country, and it’s easy to see how $124 billion can be wasted in a single year — to say nothing of the time and energy of medical professionals that is squandered on needless procedures.

A further result of reckless litigation directed at America’s doctors is to make health insurance prices unaffordable for millions of citizens. America’s extra $124 billion in yearly liability-related healthcare spending translates to an additional 3.4 million uninsured people.

There are significant costs associated with the addition of 3.4 million uninsured. The uninsured are more likely to let diseases and conditions go untreated, resulting in needless sickness and premature death. There is an economic effect as well, through an overall decline in worker productivity.

All told, the total lost economic output from Americans deprived of insurance due to liability risks comes to about $39 billion each year.

Remember all of this next time you hear personal-injury lawyers posturing as the defenders of patients’ rights and professional accountability. Far too often, tort attorneys are serving only their own interests at the expense of others. And everyone else is left to pay the bill.

Lawrence J. McQuillan is director of business and economic studies at the Pacific Research Institute, where Hovannes Abramyan is a public policy fellow. They are the authors of the PRI study “Jackpot Justice: The True Cost of America’s Tort System.”
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