Healthcare Insurance: What Would Be The Impact Of Tort Reform?

By Susan Thompson on February 4, 2010, 11:54 am

The cost of practicing defensive medicine is difficult to quantify. Tests ordered by medical practitioners simply to defend their diagnoses and thus their treatment should a bad outcome result, make medical care more costly. Most if not all physicians claim this type of medicine is a large component of the escalating healthcare budget but the exact amount and how it would change in the face of tort reform is often difficult to determine. A few studies have attempted to evaluate this cost.

Defensive Medicine Common

Studies which have attempted to quantify the cost of defensive medicine have been conducted in many ways. Chart reviews under estimate the cost of the care because no one writes “to prevent litigation” in the patient record as a reason for ordering such tests. Surveys of physicians place the cost at around $1.4 billion dollars a year of the state of Massachusetts alone.

Fear Of A Law Suit

Studies also show that 1 in 4 physicians are sued annually. This statistic alone strikes fear in the hearts of most practicing physicians, especially those in the high risk specialties such as obstetrics and surgery where the risk of being sued is over 80% in their practicing lifetime. This fear, along with the escalation of liability insurance premiums to cover such litigation; result in increased costs to healthcare insurance companies for physicians practicing defensive medicine.

Results Of Tort Reform

In states such as Texas, where tort reform was a ballot issue reducing the amount of damages which could be paid for pain and suffering over a decade ago, efforts have been made to quantify the effects. While the cost of health insurance in Texas continues to rise, it has risen more slowly than in states without tort reform. This is making states with tort reform laws areas where large companies wish to locate saving money on healthcare insurance costs.

 

Bottom Line

The bottom line of the impact of tort reform appears to be a savings of billions of dollars yearly on the cost of healthcare. Physicians, freed from practicing defensive medicine will spend less on expensive tests. This will result in a lowering of healthcare costs and a decrease in insurance premiums individuals and companies pay for health insurance coverage. With this type of savings in government funded healthcare such as Medicare and Medicaid, surplus funds can be used to provide healthcare coverage for those currently uninsured.

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2. Tort Reform: Alive And Well In The United States
3. Study: Extra Healthcare Tests Done Over Doctor Malpractice Worries
4. Healthcare Reform Bill: Experts Warn Of Huge Shortage Of Doctors Soon
5. Can There Be A Happy Medium When It Comes To Tort Reform