Tort reform predicted to decrease spending and increase revenues, CBO

side note: Here is an updated report on tort reform from the Congressional Budget Office. It’s interesting when a non-partisan entity examines these proposals. Too often than not, these are more for political gain by the legislators that sponsor the bill, than actually getting something accomplished.

The Congressional Budget Office (CBO) recently analyzed the budgetary effects of tort reform proposals to limit costs relating to medical malpractice. In a previous analysis, the CBO predicted that implementation of the package of tort reforms would reduce the use of health care services and, therefore, health care spending. Recently-acquired evidence further supports the hypothesis that tort reform would slightly reduce the use of health care.

Originally, the tort reform proposals were estimated to decrease spending by roughly $41 billion and increase revenues by roughly $14 billion from 2010 to 2019. The latest estimates are substantially larger than earlier estimates for several reasons: (1) tort reform would have a greater effect on malpractice costs than previously estimated; (2) tort reform would result in a slight reduction to the utilization of health care services resulting from changes in providers’ practice patterns; (3) the effect of reduced health care spending on revenues would be greater than previously predicted; and (4) the reduction in utilization is projected to generate a proportionately larger reduction in federal spending on health care than in other spending in health care.

The CBO previously estimated that imposing limits on patients’ lawsuits involving harm from negligent health care might have a negative effect on health outcomes. However, the available evidence on the subject is mixed, and the correlation between errors and malpractice claims is weaker than previously assumed. According to one study, a majority of hospital patients who were negligently injured never filed complaints; and a substantial number of filed claims involved health problems not caused by negligence.

The estimates of the likely effects of tort reform are based on Research that links changes in malpractice costs to changes in health care spending. Examples of changes in spending include changes caused by providers’ responses to changes in the medical liability environment and also the spending changes resulting from associated changes in health status. Taking into consideration all of those factors, the weight of evidence indicates that tort reform would reduce the utilization of health care services and, therefore, spending. However, spending might increase for certain patients, providers, or procedures, while decreasing for others.

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