Rockefeller Questions CBO’s Assertion That Tort Reform Could Save $54 Billion

Sen. Jay Rockefeller (D-WV) doesn’t believe the Congressional Budget Office (CBO) when it says that tort reform could reduce the use of ‘defensive medicine’ and save the federal government $54 billion over 10 years. In a six page letter to ‘Doug’ (Elmendorf, the director of the CBO), Rockefeller points out that the CBO recent conclusion reverses years of precedent and relies on academic studies that actually undermine the budget office’s final conclusion:

CBO’s recent letter to Senator Hatch creates more questions that it answers. The several cited reports contain conflicting data, which tends to support CBO’s prior conclusion that the evidence available on the issue of defensive medicine is “inconsistent” and “mixed.” It is impossible for CBO to conclude that we will see cost savings from a reduction in health care services without analyzing the effects on patient health.

“CBO has repeatedly concluded that cost savings associated with medical malpractice reforms would be minimal and the at evidence concerning defensive medicine is ‘inconsistent,’” Rockefeller writes, noting that the budget office has previously determined that “the effect of medical malpractice reform “would be relativley small — less than 0.5 percent of total health care spending” and would “save [only] $5.6 billion over 10 years.”

Indeed, states that have adopted tort reform have failed to significantly lower health care costs. 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. It didn’t happen. 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 of 2006, Texas was still at the top of the list of high-spending states.

A physician’s motivation for engaging in ‘defensive’ behavior or overtreatment is far more complicated than the fear of lawsuits, health expert Maggie Mahar explained during an interview with the Wonk Room:

It may be that he saw a case like this once before and it went sour, and he doesn’t know why and so he wants to be extra careful. It may be that he has been seeing Ms. O’Connell for years, she is a dear person and he really cares for her and he just wants to make sure that no stone is left unturned. Could be that he has been seeing Ms. O’Connell for years, she is a pain in the ass, and he knows that if he doesn’t order every treatment that her neighbor says he needs, he’s going to be hearing from her. And it could be that he is afraid of being sued. If I were the doctor, I wouldn’t be able to untangle my motives and say to what degree fear of malpractice suits is driving my actions.

Experts believe that the current reimbursement structure does more to shape practice patterns than fear of liability. “The current health system reimburses doctors, hospitals, and other health care providers based on the number of visits and procedures that are done. As a result, health care providers’ revenues and profits increase when they deliver more services and the cost of health care goes up,” Ellen-Marie Whelan, a Senior Policy Analyst at the Center for American Progress, wrote in a recent report.

The current reform legislation attempts to re-align the incentives in the current system. It encourages providers to coordinate primary care services, expands pilot programs that reimburse providers in bundles and for episodes of care and allows the Secretary of Health and Human Services or the Center for Medicare and Medicaid Services to expand successful models. These kinds of reforms have saved money in places like Cleavland Clinic and the Mayo Clinic and will likely do more to reduce defensive medicine than the largely unsubstantiated reliance on tort reform.