tort reform

Jesse Taylor addresses what is is sure to be an issue that’ll be coming up from now through Nov. 2–how the evil trial lawyers are driving up the cost of health care with their outrageous malpractice suits. As Jesse points out, this conclusion is incorrectly derived from two (true) premises–trial lawyers sue for malpractice and sometimes they win and get money, and malpractice insurance rates have risen considerably in recent years.

This is nowhere near sufficient to draw the conclusion that trial lawyers are somehow responsible for the rise in health care costs. The first problem is that this payouts are the primary driving force in insurance rates. This represents a profound misunderstanding of the workings of the insurance industry. These workings are rather complicated, and indeed there is much about them I don’t understand, but the simplified version is that the insurance underwriters make investments, and when those investments don’t do well, they need to make up the revenue through insurance rates. And, insurance industry investments are very similar (many insurance companies share a few re-insurance companies, who make similar investments), so this tends to happen across the board. This would explain why, in 1999-2001, malpractice payouts decreased sharply, but premiums continued to rise. (see link below, pg. 18, for handy chart, an assortment of research on the matter has been corraled by public citizen here, thanks to Jadegold in pandagon comments)

Another additional fact is worth highlighting. For some reason, the professional community of physicians have been highly reluctant to deal with their own “problems.” As this report (warning: PDF) indicates, 5% of all doctors are responsible for 54% of all malpractice payouts, and only 7.6% of them have been disciplined by state medical boards (and only 17% who have five or more malpractice judgments against them have been disciplined). The legal community is far more agressive in dealing with the their own incompetents. I can understand why doctors might be squirelly about this; they see themselves at risk of wasting 8-10 years or laborious training at tremendous expense through a mistake, and they get defensive, which is entirely understandable. Still, I’d like to see a closer look given these 5% by the AMA and state medical boards.

Unlike some, who worry the “trial lawyer” thing is a liability for John Edwards, I welcome a national conversation about the role of lawyers and lawsuits in society and the tort reform movement, and if John Edwards on the ticket can make that happen, that’s just another plus. For decades, the tort reform movement has been demonizing trial lawyers and promoting the “lawsuits are out of control” discourse in the service of draconian tort reform laws that would leave citizens with little recourse when seriously injured or wronged. Various interests have fought this movement, but they haven’t really taken that fight to the court of public opinion, so many of the claims about lawyers and lawsuits have gone unchallenged. Edwards may be provide the opportunity to make their case.

Addendum: my co-blogger’s advisor has been working on a book on all this for quite a while. According to amazon, it’ll be out just before the election.