Bush to AMA: Tort reform a must

The president also lays out his plan to reform Medicare to include prescription drug coverage.

By Joel B. Finkelstein, amednews staff. March 17, 2003.

Washington -- Physicians attending an annual AMA advocacy conference were elated to hear President Bush and lawmakers promise to push for liability reform this year.

"There are too many frivolous lawsuits against good doctors, and the patients are paying the price," Bush said, generating a standing ovation by his physician audience. The federal government loses $28 billion a year from the direct cost of liability insurance and the indirect cost of defensive medicine, he added. "Something which affects our budget so significantly requires a national solution."

Bush and Republican leaders in Congress have advocated for legislation that would cap awards for noneconomic damages at $250,000. A House bill, based on a California law that physicians say has been successful in keeping liability insurance premiums in check, also would limit the proportion of awards that trial lawyers could claim.

Speaking at the meeting, Senate Majority Leader Bill Frist, MD (R, Tenn.), vowed to address the issue this year. Liability reform legislation was passed by the House last year but never made it to the Senate floor.

Dr. Frist called the court system the wrong place to address medical errors. "The way you fix a system's failure is to fix the system," he said, adding that the way to fix the system is to allow physicians to discuss problems without having trial lawyers use it against them.

Rep. James Greenwood (R, Pa.), who has spearheaded liability reform in the House, said he hoped to send his bill, the HEALTH Act, to the Senate by mid-March. He said opponents would try to slow the passage of the bill, but that arguments for tort reform are stronger than ever.

The federal government loses $28 billion a year from costs of liability insurance and defensive medicine.

In opposing federal legislation, Democrats argued that tort reform shields both physicians and liability insurers from paying damages when a patient is harmed. Trial lawyers said that they are scapegoats for insurance companies with shrinking stock portfolios.

"The problem is not in the courtroom, but appears to be in the boardrooms of our nation's insurers, where companies raise medical liability premiums to offset low returns on investments," stated the American Bar Assn.

But Bush laid the blame with trial lawyers.

"Without fair and reasonable limits, the legal system looks more and more like a lottery. And with the trial lawyers getting as much as 40% of the awards and settlements, it's pretty clear who is holding the winning ticket," the president said.

Physicians at the meeting said they were happy to hear the president push for federal liability reform.

Urologist Douglas E. McKinney, MD, who is president of the West Virginia State Medical Assn., said his state's Legislature was close to passing liability reform. He said his county had seen the loss of its few remaining specialists accelerate over the past 18 months.

Michael B. Hoover, MD, president of the Indiana State Medical Assn., said he was seeing more support for liability reform than ever before. Indiana was one of the earliest states, along with California, to pass tort reform.

Like West Virginia, many states are trying to enact their own reform measures. Greenwood explained, however, that not all states can rely on this approach. The constitutions of some states don't allow caps on jury awards.

Voices for tort reform

The day before the president's speech, the AMA released a report concluding that patients are losing access to care in 18 states due to increases in liability premiums of 25% to 400%. This is six more states with a liability crisis than were identified in a similar report last June.

"As medical liability insurance becomes unaffordable or unavailable, physicians are being forced to close their practices or drop vital services," said AMA President-elect Donald J. Palmisano, MD. "Skyrocketing liability premiums are seriously affecting patient access to care."

Trial lawyers get as much as 40% of awards and settlements.

AMA President Yank D. Coble Jr., MD, said, "Our system has evolved into a 'lawsuit lottery,' where a small number of patients and their lawyers get astronomical awards, and millions more suffer the consequences because these awards are bankrupting the system."

At the AMA meeting, Dr. Frist said the severity of the problem became clear to him late last year, while he vacationed in Florida. He passed a crash on the highway and stopped to help emergency crews stabilize the victims. Physicians later e-mailed him to ask why he would take the risk of being sued.

Dr. Frist also spoke with surgeons at the hospital where the victims were taken. They told him that they were on the verge of leaving the state because of liability insurance rates.

Ralph Gregg, MD, who works in a trauma center in Florida's Lee County, said that the center was considering closing down. That would leave a gaping hole in local coverage and increase the burden on other community facilities, he said.

"I worry about my wife and daughter," he said. "Where will they go?"

Medicare reform refined

Bush also outlined a plan for reforming Medicare that does not require seniors to switch out of fee for service to get help with prescription drug costs.

In calling for Medicare reform, Bush criticized the current system as being outdated and overly bureaucratic, often requiring Congress to pass a new law to make Medicare cover services that have long been considered a standard of care. "Seniors should not have to wait for an act of Congress to get effective, modern health care."

Bush's proposal, a revised version of a plan floated on Capitol Hill earlier this year, would offer Medicare enrollees three basic options.

Seniors staying in the current fee-for-service Medicare would receive a discount card that would shave 10% to 25% off prescription drug costs. Low-income seniors also would be eligible for $600 in annual help.

Alternatively, seniors could join Enhanced Medicare, in which they could choose from multiple managed care plans with prescription drug benefits, preventive services and limits on out-of-pocket costs. This would be based on the Federal Employees Health Benefits Program and would allow seniors their choice of physicians, White House documents state.

Seniors also could choose Medicare Advantage, similar to the Medicare+Choice program. This would give seniors "an affordable network of doctors, provide drug coverage and allow seniors to keep their out-of-pocket costs to a minimum," Bush said.

The discount drug card and $600 subsidy would be available to all Medicare enrollees immediately, while the rest of the plan would be phased in over time. Bush's budget would commit $400 billion over 10 years to fund the proposal.

Physicians attending the meeting reacted well to the proposal.

Douglas M. Stevens, MD, an ear, nose, and throat specialist from Fort Myers, Fla., said he was pleased that Bush had moved away from his earlier plan to encourage seniors to join managed care to receive a drug benefit.

But Democrats' reaction to the proposal was less favorable. Rep. Pete Stark (D. Calif.) called it empty rhetoric. "His framework is a misguided attempt to disguise the Republicans' effort to privatize Medicare. No matter how you measure it, beneficiaries will pay more and get less under President Bush's plan."