Tort Reform Can Lower Healthcare Costs Posted: November 2nd, 2009

Congressional Budget Office Estimates Tort Reform to Save $54 billion Over 10 Years

Tort Reform Estimated to Save $54 billion Over 10 Years

The Congressional Budget Office, or CBO, reported that tort reform would save the federal government a total of $54 billion dollars over 10 years. The CBO says studies suggest that tort reform, which would lower the cost of medical malpractice, would save money by lowering the utilization of medical care. This concurs with the frequently made argument that doctors order unnecessary tests in order to protect themselves from malpractice suits or even stop practicing due to the high cost of malpractice insurance.

How High Are the Stakes?

Preventable medical errors are estimated to cause 44,000 to 98,000 deaths a year in the United States. Limiting awards, while saving money, may mean that individuals who are harmed might not be fully compensated for their injuries.

Limiting Awards

One method of achieving savings could be limiting awards for non-economic damages, such as pain and suffering, or limiting the amounts of punitive damage awards.

Another way of reducing payouts would be replacing joint-and-several liability with a fair share rule. With joint-and-several liability, plaintiffs try to collect from which ever party to a malpractice suit has the deepest pockets or most money available to pay a claim. With the latter type of lawsuit, defendant's liability is limited to their percentage share of the injury.

How Meaningful Will the Savings Be?

The American Association for Justice, a group that represents plaintiff's lawyers points out that medical malpractice costs are a relatively small part of U.S. healthcare costs and that malpractice reform would provide only 0.3 percent savings. In a 2005 study conducted by Harvard economist Amitabh Chandra, the cost was estimated at only $12 per person.

Studying Other Ways to Reduce Malpractice Costs

The administration has announced grants of $25 million to states and healthcare systems to study this issue. The grants, intended to reduce the costs of medical malpractice will examine ideas such as doctors and hospitals quickly acknowledging errors, offering apologies and restitution and pledging to take corrective action to prevent future harm.

Unfortunately, the best way to protect yourself from malpractice is to make sure you've got insurance. If you're one of the many without, get some health insurance quotes and pick out a plan. Even cheap health insurance can protect you from destitution while you wait for malpractice monies to come in.

Sanford Ellowitz

Sanford Ellowitz is a New York State licensed insurance agent. He is also a Certified Financial Planner and a Certified Employee Benefit Specialist. He has over 25 years experience in the insurance and financial services industries. His experience includes financial analysis, product development and marketing. He provides insurance planning and product sales.