Tort reform wouldn't dent health spending -- CBO report

Changes should focus on fairness to both patients and physicians, the study concludes.

By Tanya Albert, AMNews staff. Feb. 23, 2004.

Medical liability reforms proposed in Congress likely wouldn't have a big impact on overall health care spending in the United States, according to the latest in a series of Congressional Budget Office reports on the subject.

The estimated $24 billion in malpractice costs in 2002 accounted for less than 2% of health care spending. "Thus, even a reduction of 25% to 30% in malpractice costs would lower health care costs by only about 0.4% to 0.5%, and the likely effect on health insurance premiums would be comparatively small," the CBO stated in its report, "Limiting Tort Liability for Medical Malpractice."

Even if tort reform doesn't have an impact on the larger overall economy, action is still warranted, said Larry Smarr, president of the Physician Insurers Assn. of America.

"There are a lot of issues that Congress takes up that don't affect the entire gross national product," he said. "For example, gun control and campaign finance. Still, these are very important issues."

The budget office also said its initial studies showed that savings from decreased "defensive medicine" aren't expected to add up to much.

The CBO analyzed data from hospitalized Medicare patients and found no evidence that limits on tort liability reduced medical spending. It also failed to find statistically significant spending differences in states that have tort reform and states that do not.

But outside studies have shown a strong relationship between medical costs and the threat of litigation, the report said. Therefore, the CBO stated, it will continue to study the issue using other research methods, and the question of whether tort reform reduces spending remains open.