Politico Pulse pulls out this telling internal memo from Ryan Lizza’s New Yorker piece this morning examining the thinking of the Obama administration during the health care reform debate. Obama publicly flirted with the idea of making a greater investment in tort reform and pursued the proposals in order to secure Republican cooperation and support:

“On July 1, 2009, his top health care adviser, Nancy-Ann DeParle, submitted a detailed nine-page policy memo asking whether the White House should consider including medical-malpractice reform in the legislation. Most Democrats opposed the idea, but the American Medical Association was pushing for it. ‘Obviously, we shouldn’t do anything that weighs down the overall effort,’ Obama wrote back, in his characteristically cautious and reasonable style, ‘but if this helps the AMA stay on board, we should explore it.”

Ultimately, none of this mattered very much. The Affordable Care Act contains funding for tort reform demonstration projects — as well as a multitude of other Republican-backed initiatives — that the GOP ignored because they were more interested in preventing Obama from signing one of the most sweeping social reforms in a generation than addressing the nation’s health care crisis.

What the administration learned all to late is that the details of the policy had absolutely no bearing on the tone of the opposition. Republicans relied on the same “big government” talking points to combat reform even as the measure became more conservative and Democratic lawmakers stripped out initiatives like the public option, end-of-life counseling and a host of other provisions that Republicans found repugnant. But no matter how much the bill changed to resemble the Heritage-backed Romneycare solution that relied on private competition and private enterprise, the GOP still claimed that the government was taking over health care and rationing services to seniors.

Lizza reports that Obama still believed that he could win over the opposition and rejected good policy in order to make the bill more acceptable to conservative opinion makers. One memo reveals, for instance, that Obama turned down a pilot program “to study the most effective treatments for patients” within the Federal Employees Health Benefits Plan (FEHBP) because it was not “politically viable” and could prove a target for Fox News. The president wrote at the end of the memo, almost apologetically, “Unfortunately I think the political guys are right about how it would be characterized. Let’s go back at it in future years, when the temperature on health care and the economy has gone down.”

Almost two years later, the temperature is still at a boiling point and the GOP presidential candidates are crisscrossing the country accusing Obama and the law of everything from ending private enterprise to jeopardizing the livelihood of seniors. Given the partisan divide of modern American politics, Republicans and their supporters in the media will invent controversy where none exists and so it’s foolhardy to abandon good policy out of fear of inflaming the critics. They’ll burn you anyway, while you’ll have a harder time defending a decision that was made on political, rather than policy merits.

Rick Perry routinely overstates the success of his tort reform initiative in bringing more doctors to Texas, an Associated Press analysis has found. For instance, the governor claims that before his 2003 law — which caps non-economic damages in malpractice lawsuits to $250,000, limits time for filing a cause of action, toughens the standard of proof and raises the bar on qualifying expert witnesses — skyrocketing insurances costs were chasing doctors out of the state. The reform lowered malpractice insurance costs and “licensed more than 23,000 new doctors,” Perry says on the stump. During a recent speech to the Georgia Public Policy Foundation he added, “Pregnant women have better access to OB-GYNs. People in need of trauma care have better access to neurosurgeons and other specialists.”

But Perry’s 23,000 estimate includes 10,000 “who sought licenses in Texas but took jobs elsewhere” and overall, “the increase in physicians in Texas roughly tracked the state’s population growth”:

And the bulk of that influx has come in larger cities where health care was already abundant, leaving large rural swaths of Texas still without doctors…. [M]edical records in Texas show that of the state’s 254 counties, only 106 have an obstetrician/gynecologist — just six more than in 2003. In Presidio County, which has 8,000 residents and is growing, some of Parsons’ patients move 240 miles away to live with relatives in Odessa or Midland when they become pregnant. [...]

Medical rolls increased by 24 percent since 2003, while Texas’ population was soaring by 20 percent during the decade. Texas also saw rapid growth of physicians per capita before tort reform, according to the Texas Department of State Health Services.

Part of the challenge Texas faces in recruiting more doctors is its low Medicaid reimbursement rates and state cuts to medical education. This year, lawmakers cut $805 million from doctors serving Medicaid patients and postponed $4 billion in Medicaid costs for payment in the next budget cycle. The latest state budget also included an 8 percent cut in reimbursement rates to hospitals and reduced state support to graduate medical education by almost 40 percent. As a result, more than 5.2 million Texans already live in areas designated as official health professional shortage areas. In fact, Texas ranks 48th out of 50 states in the number of physicians per 100,000 residents.

Rick Perry doesn’t have much of a health care record to run on. A quarter of Texans are uninsured, the highest in the country, Texas has the narrowest Medicaid eligibility standards, and spends the least of any state on mental health and the second to least on health care for the poor. Perry’s sole accomplishment seems to be the 2003 overhaul of the state’s malpractice system, which the newly-minted candidate promoted during a stop in New Hampshire on Sunday:

The two top issues in the election, he told voters, are jobs and debt, which Romney, too, hammers on the campaign trail. But while Romney tells voters repeatedly how much he knows about the economy from working 25 years in the private sector (and spends little time talking about his record as governor of Massachusetts), Perry weaved together his vision for the nation’s economy by tying it to his accomplishments in Texas.

“We’ve had the most sweeping tort reform in the nation,” he said, asserting that as a result of the law passed in 2003, there are 20,000 more physicians in Texas. He spoke of cutting taxes and sparking the best job growth of any state in the nation.

And instead of blasting President Obama in the ways his competitors have, Perry chose his words carefully, explaining that he’s not angry but indignant about the federal government.

It’s hard to know if malpractice is to credit for the additional physicians, but it’s certainly not responsible for lowering the state’s health care costs and that serves as an uncomfortable case study for how the GOP’s favorite reform prescription — tort reform! — falls short of expectations.

When Texas capped non economic medical malpractice damages to $250,000 in 2003, most conservatives argued that the reform would free doctors from having to prescribe unnecessary treatment to avoid lawsuits. It didn’t work out that way. According to the Dartmouth research on disparities in health care spending, many Texan doctors are still prescribing aggressive treatments that don’t improve outcomes. In fact, as you can see from the chart below, Texas’ Medicare spending “seems to have gone up faster than the nation’s since 2003“:

The truth of the matter is, despite conservative claims to the contrary, malpractice costs make up only a very small percentage of health care spending. And most health experts believe that while fear of lawsuits may certainly be motivating doctors to practice defensive medicine (over prescribe unnecessary treatments and procedures) the nation’s fee-for-service reimbursement system bares more of the blame. Texas’ experience seems to validate that theory.

California-based Consumer Watchdog is blowing the whistle on a malpractice-reform provision within the Gang of Six’s $3.7-trillion deficit-reduction plan, deriding such an attempt as a “gimmick” meant to satisfy GOP lawmakers and their backers. If the budget-cutting proposal is passed, the Judiciary Committee would have six months to recommend legislation that would reduce entitlement spending by an “unspecified amount through medical malpractice reform.”

But according to Consumer Watchdog’s Washington director, Carmen Balber, such an effort would not cut spending in any meaningful amount but instead put patients at risk:

“Limits on liability for doctors who commit medical negligence is a political bone for the Gang of Six to throw for buy-in from Republicans, not a meaningful compromise that will provide real savings to help close the deficit. President Obama should reject this gimmick in favor of solutions that are proven to reduce the cost of medical malpractice: improving patient safety and decreasing medical errors…

“Medical liability limits are likely to increase health care spending and the national debt by burdening Medicare and Medicaid with the cost of care for patients who are injured by doctors’ mistakes but cannot hold them accountable.”

Texas’ experience with malpractice tort reform supports Consumer Watchdog’s claims. In 2003, the state capped damages from malpractice suits at $250,000 in order to control rising health care costs. Yet since the legislation went into effect, health care costs have shot up even faster, according to a study by the Public Citizen:

* The cost of health care in Texas (measured by per patient Medicare reimbursements) has increased at nearly double the national average;
* The state’s uninsured rate has increased, remaining the highest in the country;
* The cost of health insurance in the state has more than doubled.

In fact, the only improvement the Texas health care system saw was a fall in doctors’ liability insurance premiums.

The nonpartisan Congressional Budget Office (CBO) estimates that malpractice reform reform has the potential to “reduce total national health care spending by about 0.5 percent…That figure is the sum of the direct reduction in spending of 0.2 percent from lower medical liability premiums and an additional indirect
reduction of 0.3 percent from slightly less utilization of health care services.”

The CBO does acknowledge that malpractice reform could damage health outcomes, but states that most research must be conducted to assess the effect on patient care . –Sarah Bufkin

Peter Orszag laments in the New York Times today about the Democrats’ failure to include more robust malpractice reform in the Affordable Care Act, noting that “what’s needed is a much more aggressive national effort to protect doctors who follow evidence-based guidelines“:

The health care reform act that Congress passed earlier this year included a modest set of state pilot projects, including one in Oregon that is intended to experiment with this approach. But these pilots are small; the project in Oregon, for example, has only $300,000 in financing.

What’s needed is a much more aggressive national effort to protect doctors who follow evidence-based guidelines. That’s the only way that malpractice reform could broadly promote the adoption of best practices. [...]

The health care reform act that Congress passed earlier this year included a modest set of state pilot projects, including one in Oregon that is intended to experiment with this approach. But these pilots are small; the project in Oregon, for example, has only $300,000 in financing.

What’s needed is a much more aggressive national effort to protect doctors who follow evidence-based guidelines. That’s the only way that malpractice reform could broadly promote the adoption of best practices.

Indeed, when I spoke to former Sen. Tom Daschle (D-SD) several weeks ago, he too indicated that malpractice reform was probably a missed opportunity that would have been politically difficult to incorporate into this effort. “I’m actually not surprised, I’m disappointed that we’ve failed to go further on some of these issues. I think the President is a realist, he’s a pragmatist, he needed to ensure that we could bring a bill, maybe not with everything he/we wanted across the line,” Daschle told me. “I think he felt it would be hard to hold Democratic caucuses together moving a bill that went further. Ultimately, I’m confident that it’s going to happen….it was probably a bridge too far in this legislative effort.”

To be clear, malpractice costs make up only a small percentage of national health care expenditures and malpractice reform does not significantly decrease physicians’ anxiety of being sued. But it’s an issue worth tackling, since developing sensible solutions could improve quality and increase the number of physicians. The good news is, as I’ve been chronicling here, HHS is already funding some promising pilot projects that could provide a template for any future legislative efforts.