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In the immortal words of the 43rd President of the United States, “fool me once, shame on you. Fool me … you can’t get fooled again.”
Tort reform has made fools out of a lot of people for many years. First, it is touted as the answer for doctor’s skyrocketing premiums, then for the exploding cost of health care. Yet time after time, the only group that ever really profits from it is the insurance industry.
In the early part of the decade, doctors clamored for tort reform in response to insurance companies jacking up their rates for malpractice insurance. Now, 46 states have passed some version of it. But ironically, malpractice premiums are lower in states without caps. Doctors did not benefit, and the patients who had their rights eliminated certainly did not benefit. So who came out winners from a decade of destroying the civil justice system?
That would be the insurance industry. Tort law changes made medical negligence cases so difficult to pursue that claims dropped precipitously. Between 2000 and 2006, the amount of money insurance companies paid out decreased by 15%. But that did not help the doctors because insurance companies never passed on those savings. In fact, the amount of money insurance companies took in from doctors increased by 120%.
To their credit, insurance industry execs and enemies of civil justice never denied they had pulled the wool over everyone’s eyes. “Insurers never promised that tort reform would achieve specific premium savings,” said the American Insurance Association in 2002. “We wouldn’t tell you or anyone that the reason to pass tort reform would be to reduce insurance rates,” said Sherman “Tiger” Joyce, head of the tort reform movement in 1999.
Now, times are good for the insurance industry. Insurance company CEOs make more money than CEOs in any other industry. Malpractice insurers themselves are enjoying the best operating margins for 20 years. In 2008, the average profit of the top ten malpractice insurers was higher than 99% of the Fortune 500. But now they call for tort law changes under the guise of reducing health care costs. Never mind that the costs associated with medical negligence are such a small fraction of health care costs that almost all academic and government researchers agree that limiting patients’ legal rights would do nothing to fix health care.
They fooled everyone once before. Now 46 states have made it harder for injured people to seek recourse, and American families still shoulder exorbitant health care costs. All the facts and data say it doesn’t work. There’s still 98,000 people dead every year from medical errors. And the insurance industry is enjoying booming profits. Tort reform is nothing more than a bailout for an industry already awash in money. You can’t get fooled again.
Anthony Tarricone is President of the American Association for Justice
79 Comments
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Anthony, Welcome to the Lake.
Marcy, Thank you for Hosting this salon.
Thanks for having me today. I look forward to discussing the importance of protecting patients in the health care debate.
Anthony, thanks for coming back, how was the reaction to your post last week on The Seminal?
Anthony:
Thanks for joining us! I’m a person who could not sue a negligent doctor because too much time has elapsed, and I’m acutely aware of how malpratice serves as a check on bad doctors.
What do you say to the comments of people like Howard Dean (who is otherwise a champion of health care reform) who says we need to take away Doctors’ incentives to do lots of tests that are otherwise unnecessary? How do we do that without giving up the right for redress?
Good morning Mr. Tarricone and welcome. As a trial lawyer, I of course have issues with “tort reform” and “malpractice reform”. In the event it were to occur however, are there any contingency plans for maintaining accountablility for medical negligence?
It was great hearing from readers, who seem to understanding that bargaining away patient’s legal rights will do nothing to fix health care. On the other hand, many people don’t realize how many people are killed very year by medical errors (let alone injured), so I think that’s an important element to this conversation.
Also, why aren’t doctors speaking out more about how malpratice reform hasn’t helped them? I’m thinking of this exchange from that widely talked about Atul Gawande article on health care costs.
Is it that Doctors just haven’t noticed that tort reform hasn’t helped them?
I hear from people like yourself all the time, and I’m very sorry about your situation. In terms of incentives for testing – or doctors running additional procedures because of liability fears – the data and research tells a far different story. The CBO, GAO, and other researchers have looked at this, and find that more tests are run because it is actually beneficial to patients, or because the current fee-for-service model gives care providers more profit per procedure.
AAJ actually released a white paper today specifically on “defensive medicine,” which can be found here: http://www.justice.org/resourc…..dicine.pdf
Welcome Anthony, and I agree completely. Tort reform doesn’t do anything for our health.
Anthony,
I figured out the structural economics problem with the medical industry back in 1991, as an unintended result of analysing the components of inflation. The medical, legal, and higher ed inflation rates have been among the highest in whatever post-WWII period you examine. The three have two important characteristics in common, which gives them tremendous economic power: a knowledge gap between the supplier and the customer, and the customer is vulnerable. I called this the Mafia of the Intelligentsia. Of course, that reveals nothing about how the spoils are distributed within the pieces of each separate mafia. What you have revealed is that the established cartels, insurance corps, beat out loosely organized cartels, docs & lawyers. This is not a surprising outcome.
It’s very difficult to say. We’re hoping Congress puts patients first, and understands that tort law changes won’t fix health care. If you look at states that have enacted caps (about 30), it is now very difficult for patients to seek legal recourse. Additionally, all the promised cost savings from tort reform have gone straight to the insurance companies, never consumers or patients. It’s clear less accountability won’t make health care better or safer.
Can you say a few words about the Dems who repeat this line? Is it just the usual suspects trying to kill reform generally? Anyone stand out?
More than Wall St. CEOs?
There are some doctors that have realized tort reform was not the cure-all they thought it was. They’ve seen the number of claims go down, but their premiums continue to rise. As with many of the problems we see in health care, it can be traced back to the insurance companies.
Can you talk about the overlap between malpractice insurance industry and the health insurance industry?
And to what extent the rising premiums in both industries relate to stock market exposure rather than their insurance function?
Generally, I think folks out in the general public instinctively believe tort reform, somehow, can magically fix health care, even though it’s such a miniscule cost overall. So during the August recess and in townhalls, members of Congress were hearing folks yelling about changing the legal system, when all told, these same people were probably against health care reform anyway. So it’s important that we educate members of Congress that patient safety should be the priority, not limiting patients’ legal rights.
Can you explain to our readers the move being made in Congress by Leahy to repeal antitrust exemption for health, medical malpractice insurance companies and how you think it will affect the playing field we are discussing?
I believe you’re right that the insurance industry has a stranglehold on the current system. They are, after all, the only industry granted an anti-trust exemption. The more we have looked into the insurance industry, the more we see a pattern of putting profits over policyholders, or the general public at-large.
Nice to see you here, Anthony, and welcome. However, I am wondering if doctors don’t think that tort reform will serve to reduce their medical malpractice insurance premiums? Also, how much is that complete “pie in the sky.” The way I see it, they will go up to “whatever the traffic will bear;” I doubt that reduced risk of major malpractice suits will reduce their insurance rate much, if any.
Mr. Tarricone, thank you for this fine article. The Repuglicans have touted “tort reform” for so many decades that it is quite wearying to hear it again. But I guess that’s all they’ve got.
Do you have any further information about health care reform legislation the WH itself has reportedly written?
Combining your question with eCAHNomics’ post at #10 and what I understand of the Gawande article, I’d say that the Docs (in McAllen, in contrast to those in El Paso or at the Mayo Clinic) are still operating their cartel while the insurance companies reap the benefits of tort reform, and that the general surgeon cuts through the conflation between the two.
Malpractice insurers and health care insurers are often mixed up. The truth is that the insurance industry overall is enjoying record profits, despite the economic collapse. In fact, the top ten malpractice insurers have a profit margin better than 99% of Fortune 500 companies.
All told, it doesn’t matter if the insurance company has doctors or patients as policyholders; we still see a pattern where these people are treated unfairly.
You’re right that tort reform doesn’t reduce rates. In fact, states with malpractice caps have HIGHER premiums than states without caps. And from 2001-2008, states with caps saw their rates increase much more than states without caps.
It might not be a bad idea to get some of them on TV.
I agree that opponents of health care simply use tort reform as an excuse and distraction. The CBO, GAO, and countless other researchers have found that changing the legal system won’t lower costs or cover the uninsured. It’s a red herring.
Where is the overlap? Which companies?
Insurance is the ultimate moral hazard industry: the more bad behavior (not paying claims), the higher the profit. Which is why regulation is soooo important. In the case of medical insurance, the consequence of not paying claims is death, so I guess you can put those ghouls at the top (or perhaps bottom would be more appropriate) of the list.
It’s red herring, but one Obama was willing to try to float to get Olympia Snowe to vote for reform.
I am not a doctor, but in another profession where I needed “professional liability” insurance. I finally had to drop it last year, as I could no longer afford it. And now it really isn’t an issue as most of the assets I was wanting to protect have evaporated anyhow. Sad situation we all are in.
The vast majority of doctors and medical care providers are excellent. It’s unfortunate that insurance companies have essentially used them to get tort reform passed. This has only padded the pockets of insurers, and provided no benefits to doctors or patients.
Check out this CNN piece from a couple weeks ago. They interviewed doctors and care providers in McAllen. It very much reinforces what is in the New Yorker piece. http://www.cnn.com/video/?/vid…..s.docs.cnn
Don’t forget about the three Dems who may need to hear from you about rejecting amendments yesterday: Max Baucus-MT, Kent Conrad-ND, Blanche Lincoln-AK
Baucus 202-224-2651 phone, 202-224-9412 fax, 800-332-6106 Montana office
Conrad 202-224-2043 phone, 202-224-7776 fax, 800-223-4457 NoDak office
Lincoln 202-224-4843 phone, 202-228-1371 fax, 800-352-9364 Arkansas office
Peace out
Unless you’re an insurance company executive. It’s people like you and I, or everyone who needs health insurance, or owns a car or a house, etc., that have to pay for the profits of the insurance industry. Even in the year of Katrina, insurance companies made their best profits ever.
And if insurers get tort reform passed, that means less accountability, and less money they have to pay out. Rest assured, this money isn’t passed on to consumers, doctors, or patients.
A piece in the WSJ on poverty rates around the country pinpointed the McAllen area as being the poorest in the US. Irony much?
HERE IT IS FOLKS read it and weep
Source: Dow Jones Newswire
UnitedHealth Group Inc.’s (UNH) second-quarter earnings more than doubled amid prior-year charges and an increase in revenue, though enrollment continued to decline as U.S. unemployment mounts.
The health insurer, whose earnings topped analysts’ expectations, raised the lower end of its 2009 forecast by 10 cents and now expects a profit of $3 to $ 3.15 a share.
Health insurers’ profits remain under pressure from rising medical costs and falling enrollment, while expecting payments from their government plans to fall. The industry has been trying to discourage Washington from establishing competing public plans as the health-care debate continues.
UnitedHealth reported a profit of $859 million, or 73 cents a share, up from $ 337 million, or 27 cents a share, a year earlier. Prior-year items including legal settlements cut that period’s profit by 40 cents.
Read more: http://www.nasdaq.com/aspx/sto…..spx…
Clearly Obama gets what many here do not. The United States is not France or Canada. Our history, mindset and culture is different. We are a capatalist country; the Kennedys, George Soros, Arianna Huffington and Micheal Moore are all wealthy beyond comprehension. Obama also gets that there is more to America than Berkley and Greenwich Village.
We will get a health care bill. It will eliminate pre-existing conditions, and make it illegal for insurance companies to drop those that get ill and eliminate caps on coverage. That’s good enough, that’s a great start. The public option and single payer will NEVER happen in this country.
If the insurers are really screwing doctors why are doctors the ones pushing for tort reform. Isn’t it really because they are sick of getting hit by multi-million dollar lawsuits when a patient has a bad outcome, whether or not there was malpractice involved.
Wouldn’t a set of national standards such that if a patient presents this way then these tests should be performed reduce the need for preventative medicine? Additionally insurance companies are not necessarily interested in reducing losses. An example: If there are $100K in losses then premiums of $100K x x would be justified. If losses are $100million then premiums of $100million x x would be justifiable. The latter is much more profitable.
This isn’t remotely true. People seem to think there are many medical malpractice lawsuits filed, many of which have no merit. All the facts show otherwise.
According to the National Center for State Courts, medical malpractice cases are less than one percent of all civil filings. And this has declined by eight percent over the last decade.
Additionally, a 2006 Harvard study showed that 97% of cases were meritorious, totally debunking the notion of a system with an influx of so-called “frivolous cases.”
The single most effective thing we can do to limit the seemingly outrageous tort settlements is pass universal health coverage (of whatever form) to ensure that people who are permanently damaged due to malpractice, or under any other litigious circumstance cannot be denied affordable health care coverage for their “new” health condition in the future.
In today’s reality when any pre-existing condition will diqualify you from any potential coverage in the future, victims and their families have no other option than to get as large a settlement as they possibly can, when they can. To do otherwise would be to seriously jeapordize their family’s future financial well being.
But if there is a safety net in place that will ensure those victims are able to not only get, but affordably pay for their future medical needs (both directly relating to the malpractice incident or not) there won’t be the need for them to guarantee their own coverage via a litigation settlement.
“vast majority of doctors and medical care providers are excellent”
At medicine perhaps. But they are abysmally bad at self-policing.
When a sloppy doctor maims or kills people, his colleagues will act quickly to cut him out of their partnerships, end referrals to him, and otherwise get his malpractice away from their liability. But they will not report him to professional oversight groups or government regulators.
When MDs cannot see direct personal exposure, they stick together. I suspect that this would alone cause needlessly high malpractice premiums, even if the insurers weren’t corrupt. Medical errors have disproportionately awful, expensive consequences. So as long as doctors protect their own and fail to realize the importance of cleaning out the liability pool, they are going to be paying heavily.
That’s a really nice thought.
And seeing as how we continue to lose jobs to Canada BECAUSE OF HEALTHCARE then what do you propose to do with all those people out of work because our healthcare is about profit and not health?
Hmmm…a profession that needs “professional liability insurance”…assets evaporated. Might you be a realtor? Certainly you are in the same situation as many of them are currently.
WE already have it…its medicare.
[Edited by moderator: no name calling, please]
As we come to the end of this lively discussion,
Anthony, Thank you for the post and for stopping by the Lake to discuss it with us.
Marcy, Thank you very much for Hosting this salon.
Thanks all.
You’d be surprised how high premiums stay, even when losses are low. Between 2000 and 2006, the amount insurance companies paid out decreased by 15%. Insurers never passed on those savings. During that time, the amount they took in increased by 120%.
Agree. I said above that I was a victim of malpractice–when my breast cancer was misdiagnosed bc a doctor refused to give me what was standard of care because “young women don’t get breast cancer.”
So when it was finally diagnosed years later, my doctors refused to talk about that interim period. Just didn’t want to talk about the possibility that one of theirs had screwed up so badly. And so it was excluded from any discussion of my care.
Thanks for having me on, it’s been a pleasure speaking with everyone.
That’s polite. Do you always insult those you don’t agree with?
Does the American Association for Justice have an estimate for iatrogenic death and injury (those caused by medical treatment) that are not the subject of lawsuits?
That’s my health insurer! Hooray for them. I just got a letter from them that they were reviewing a denial they had issued to Mr. Gnome’s cancer clinic – Dana-Farber. I didn’t even know they had denied the claim. It was for his usual twice yearly check up scans to see whether the cancer was still at bay. (It was) I am guessing that since they have covered him for maybe three years now, and he is still alive, that it is time to start denying claims and see if he will die and get off their books before the law changes and they are forced to continue offering us coverage. We are already on COBRA, so if UHC can hange in there another nine months with no immediate reform in sight, they just might win.
it is impolite to propagandize a thread
Jane has a new cross-post up on the front page: “GOP Introduces Resolution to Censure Grayson – Debate at 2pm”
Trust me, docs don’t care about malpractice awards–that’s what insurance is for. What they do care about is bad publicity and disciplinary action by the medical board. So why are we talking about capping torts when that’s not what people are really concerned about.
best ofluck………pull these fuckers down
their last CEO…took home$1,600,000,000.00dollars
Thank you for joining us Mr. Tarricone.
I do not accept your premise. We don’t lose jobs to Canada because of health care in significant numbers. The health care industry provides jobs to millions of people, many hard working blue-collar employees. Clerks, book keepers, technicians, secretaries, etc. In this dismal economic climate I shudder to think where we would be employment wise without a health care industry.
Alright, you are being a little overboard and inappropriate; that is not the way to act with a guest present. You can make your point without being belligerent, and should do so.
I am sorry you categorize a different opinion as propaganda. Everyone has the right to their opinion wouldn’t you agree? I happen to value the elimination of pre-existing conditions and caps on coverage more than a public option.
imsorry i smell troll,and a paid one at that,this is too important an issue,to pull punches imo
For your information, I sell carpet for a living and I have my own financial issues and a family to support. I don’t appreciate being insulted and called a troll for having a slightly different opinion than you do. I am for health reform, but do not think a public option has any chance of passing and I think it would benefit me and my family immensely to remove pre-existing conditions, caps on coverage and dropping ill patients. You get what you can in life and you don’t take the risk of getting nothing.
Save the beaurocrats!!! If you’re that worried about the paper pushers, then they can get new government jobs approving claims instead of denying them for insurance companies.
Or go to work at any of the millions of new jobs that will be created by entrepreneurial Americans who are no longer forced to be wage slaves at somebody else’s company in order to provide their families with crappy health care, and will be free to start their own businesses.
I am for health reform, but do not think a public option has any chance of passing
——————————
is your last name Baucus by chance?
well said
Sorry to hear that. Madame R. also had breast cancer last year–but, so far, her care has been excellent. Mistakes were made, of course. But they were also acknowledged, acted on promptly, and, as near as we know, rectified.
It’s important to note that malpractice is NOT about ordinary mistakes, as apologists for the profession sometimes claim. Most of us accept errors, because it’s amazing that the doctors can do half of what they do without killing us. Malpractice is about gross negligence.
The example I was thinking of in my earlier post was a case where a surgeon doing a hip replacement on an elderly woman noticed a fecal impaction and proceeded to clear it–over the vocal objections of operating room nurses and the anesthesiologist–in the middle of the surgical field. She died of a massive infection shortly afterward.
The partners cut him out of the partnership immediately. But neither they nor the anesthesiologist pursued disciplinary charges. As near as I know, they didn’t even go after his hospital privileges. Nor was any real investigation done–she was old and old people die. The nurses, of course, did not have standing to make a complaint even if they had dared.
I’ve heard similar things often enough to suspect the above is not unusual.
A public option DOES have a very good chance of passing, and will if you are more vocal in your support. Latest study shows more Americans believe in UFO’s than oppose a public option. Well over 2/3 of the population are for it.
No, my last name is not Baucus. But as I said there are millions of Americans that desperately need the pre-existing condition barrier and caps to go away. We have never been this close to achieving those very important changes and I don’t want to jeopardize that with an all or nothing approach. I think that is naive politically and ultimately could result in things staying exactly the same which is not an acceptable option for me.
I respect your opinion I just disagree.
and just WHO is gonna police these corrupt Corps?
I’m sorry Sally, I respectfully disagree. It depends what poll you are looking at but in any event I don’t think you govern by polling; an imperfect science to say the least. The reality is that if you look at the no public option Schumer votes yesterday by Democrats, namely Conrad, Baucus and Lincoln, they came from Red states that did not support Obama. They are voting their constituency.
I agree totally. I think you need very strong regulatory oversight and nothing has been done about that. I just don’t think you can get it all at once. A health care bill that would achieve the elimination of removing pre-existing conditions, caps on coverage and dropping ill patients would be a huge step in the right direction. You get that done and go from there.
Thanks for the discussion and allowing me to express my opinion. I applaud your passion. Have a good day.
we were approved! yay
You aren’t any closer to making either barrier go away in anything but print until you have single-payer or a very robust public option. Pre-existing condition exclusions and caps are just tactics–and not the only tactics–for risk avoidance in the insurance industry. Others exist and others will pop up. Insurers will find ways to discriminate pricewise against groups. For example, they will charge high premiums for groups that have lots of old or sick workers, and ridiculously low rates for groups that contain mostly the young and healthy. Employers will use layoffs to rid themselves of expensive employees, with actuarial help from their insurers, so that the pattern is not clear enough for a law suit. Government subsidies for the sick will become unsustainable in the plans that accept them, while the insurance copies rake in huge profits from the plans that cover only the healthy.
We need to face it: for-profit health insurance is a fraud, not a business. You can’t make it honest unless you either regulate it to the point where profit is not possible or take it over, like we did with highways and bridges long ago.
Hmmm…which reminds me, does anyone know why, once we have insurance, we are constrained to keep it for an entire year no matter how unsatisfied we are with it?
Thanks for the thoughtful response.
I disagree strongly that eliminating pre-existing conditions, eliminating caps on coverage and eliminating the ability of an insurance company to drop you when ill is not significant change for the better. I think it would be extraordinary change and help tens of millions of people. I am not willing to throw out the baby with the bathwater and support a no vote against a bill like that because it has no public option in it. I agree with Obama and you don’t and that’s ok. That’s America.
I don’t disagree that many of the negatives you mention might rear their ugly heads. I don’t think speculation leads to anything substantive though; you just have to see the final bill and evaluate it. And my point is that not having a perfect system right away should not be a deal breaker. Compromise and change over time is a reasonable way to get things done. I think Obama agrees with that.
I do not believe that you will ever remove health care completely from a for-profit industry. It’s too radical a change, practically, as well as philosophically and as good as it sounds the upheaval to people’s lives would be significant. I prefer to change things slowly, get what you can, pass something and then regulate and deal with abuses legislatively as they come up.
Anthony,
Thank you for this piece. I am not a fan of tort reform and agree with what you have written here. However, in trying to reframe the debate with other NOT like minded folks, I find that it helps to provide original sources to support my arguments/premises. So toward that gal,would you please list the sources for you data, especially the quotes from the insurance reps. re not saying caps would reduce malpractice premiums.
(i.e., “Insurers never promised that tort reform would achieve specific premium savings,” said the American Insurance Association in 2002. “We wouldn’t tell you or anyone that the reason to pass tort reform would be to reduce insurance rates,” said Sherman “Tiger” Joyce, head of the tort reform movement in 1999″)?
It would help in efforts to open some folks’ minds.
Thanks
I believe the yearlong requirement is only for group plans. When we insured my son individually it wasn’t required. They sure drop you quick enough if you quit paying premiums. They say it’s to minimize enrollment headaches for employers – which, working for a professional employment organization I can attest can be substantial. Also, since there is no individual underwriting requirements they don’t want people signing up, getting expensive surgery/procedures done they’ve been holding off on then dropping it as soon as insurance pays out. It’s to get as much premiums as possible to offset claims.
Which I understand, but when we suffered a serious financial setback shortly after open enrollment when I signed up my (individually uninsurable) husband and could no longer afford the deductions for him our only options were a) to continue to pay the premiums for the rest of the year and untimately declare bankruptcy; or b) get a divorce in order to ger around the closed enrollment clause (only triggers for change are death, birth or divorce).
We very, very reluctantly chose option A. Now our family doctor is offering a direct contract service for primary care. We pay $76/month for unlimited, basic primary care for husband and child (includes common labs/vaccines at cost) vs. $1000/mo. insurance premiums. No copays, no hassle, no waiting for appts, no commitment. But also no catastrophic/specialist/hospital care. So that’s the next thing to figure out.
Republicans frame things in terms that help them. When we use those terms we help them, even if we argue against the concept. “Tort Reform” is such a term. How can anyone be against reform? Reform is a good thing. (Which is why Republicans don’t argue against “health care reform” but against “Obamacare” or “socialized medicine” or “government run health care.”)
Let’s call it what it is: PROTECTION FOR DANGEROUS DOCTORS