When discussing important issues like the cost of health care, it’s important to focus one’s attention on the Earth plain, wouldn’t you agree? You can’t just make things up and proclaim them to be true, like you’re living in Oz or Hogwarts or somewhere.
Author Steven Brill, whom we last wrote about here, is running around the country pushing his recent book on health care, called “America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System.” Every time he speaks, like last week before Detroit business leaders, he throws in this hot potato: “Democrats resistance to ‘sensible Tort reform’” is a major reason why we have out of control health care costs. He never explains why he believes stripping injured patients of their legal rights will solve this problem. Apparently, nor does his book. As pointed out in the Sunday New York Times book review of “America’s Bitter Pill”: “He brushes over some contentious issues, making a casual assumption that tort reform would keep medical costs down. (Texas has tort reform, but there is no evidence to show it has kept costs from escalating.)” That’s an understatement.
Allow me to assist. Those who say this kind of thing make two arguments. One, if a state doesn’t strictly limit compensation to people whom health care providers have killed or maimed, doctors will order too many unnecessary tests for the sole reason that they might otherwise be sued. Two, that if a state doesn’t strictly limit compensation in this way, med mal insurance companies will have no choice but to raise rates on doctors. And what are these major cost savings from enacting “tort reform”? According to the Congressional Budget Office in 2009, a whopping 0.3% in “defensive medicine” costs and 0.2% in med mal insurance cost. That’s it.
But even those paltry figures are exaggerations. I hope when Mr. Brill is sitting around some airport during his travels, he picks up the new edition of the New Yorker magazine. There he will find a new article from surgeon and public-health researcher, Dr. Atul Gawande, called “Overkill: An avalanche of unnecessary medical care is harming patients physically and financially. What can we do about it?” Nowhere in Dr.Gawande’s article does he even mention a state’s liability laws when it comes to evaluating health care costs.
Instead, he found that “overtesting … is a by-product of all the new technologies we have for peering into the human body.” He explains:
Our ever more sensitive technologies turn up more and more abnormalities—cancers, clogged arteries, damaged-looking knees and backs—that aren’t actually causing problems and never will. And then we doctors try to fix them, even though the result is often more harm than good.
The forces that have led to a global epidemic of overtesting, overdiagnosis, and overtreatment are easy to grasp. Doctors get paid for doing more, not less. We’re more afraid of doing too little than of doing too much. And patients often feel the same way. They’re likely to be grateful for the extra test done in the name of “being thorough”—and then for the procedure to address what’s found.
He ends by saying: “An entire health-care system has been devoted to this game. Yet we’re finally seeing evidence that the system can change—even in the most expensive places for health care in the country.”
He’s referring, of course, to McAllen, Texas. McAllen was the subject of Dr. Gawande’s 2009 seminal, widely-read and influential New Yorker article called “The Cost Conundrum; What a Texas town can teach us about health care.” There he explored why the town of McAllen, Texas, “was the country’s most expensive place for health care.” This was especially true when compared to neighboring Texas towns.
In his new article, Dr. Gawande went back to McAllen and found something extraordinary: since passage of the Affordable Care Act, the entire medical culture in McAllen had changed resulting in huge health care cost savings. He writes:
Most startling of all, McAllen has been changing its ways. Between 2009 and 2012, its costs dropped almost three thousand dollars per Medicare recipient. [Economist Jonathan Skinner, of the Dartmouth Institute for Health Policy and Clinical Practice] projects the total savings to taxpayers to have reached almost half a billion dollars by the end of 2014. The hope of reform had been to simply “bend the curve.” This was savings on an unprecedented scale.
Dr. Gawande interviewed a number of McAllen doctors and all confirmed the same thing: the culture of McAllen doctors ordering excessive expensive tests and procedures had ended. Clearly, some federal fraud prosecutions against health care providers in McAllen may have also helped. But not one doctor mentioned Texas “tort reform” as having anything to do with it. In fact, Dr. Gawande put a decisive end to that theory back in 2009, reporting this exchange with a group of doctors:
“It’s malpractice,” a family physician who had practiced here for thirty-three years said. “McAllen is legal hell,” the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he said. Everyone thought the lawyers here were worse than elsewhere.
That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down? “Practically to zero,” the cardiologist admitted.
“Come on,” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures.
Dr. Gawande makes no mention of it again. Indeed, since that first article, a virtual consensus has built in the academic literature that “tort reform” does nothing to lower health care costs. In fact, it raises them.
OK then, what about insurance rates for doctors? Aren’t they going up and up? I raise this only for the purpose of quickly dismissing it. We have been in a “soft” insurance market since 2006. That means medical malpractice rates for doctors have been stable or dropping for almost a decade now. And don’t just take my word for it.
On Friday, A.M. Best released a new report, along with a webinar about “the current state of the market for medical professional liability insurance” with industry insiders. All agreed that the soft market continues and won’t be ending anytime soon. And even though rates are low, the med mal insurance industry is now in the 9th consecutive year underwriting profit. Writes Best:
The companies that specialize in medical professional liability (MPL) insurance achieved an overall underwriting profit for a ninth consecutive year in 2014, according to a new special report by A.M. Best. The Best’s Special Report, titled, “Medical Professional Liability Segment Produces Ninth Straight Year of Underwriting Profit,” also finds that 2014 represented another year since 2003 of positive net income and the 11th year out of the last 12 of positive surplus growth (the outlier being 2008 due to the financial market collapse).
This is grotesque. Insurers do not even expect to have an underwriting profit. The Americans for Insurance Reform 2011 study, Repeat Offenders, showed that the property/casualty insurance industry had an underwriting profit only 7 times in 44 years. Brian K. Atchinson, President & CEO of the Physicians Insurance Association of America called the state of the industry “historic” and undeprecdented, going “back 50 years.” How nice for them.
To sum up the insurance situation, this industry is rolling in dough and doctors’ insurance rates are stable and dropping. There’s clearly not a problem to solve here let alone one involving stripping injured patients of their rights.
Ground control to Steven Brill?