Caps on Damages Won’t Reduce Defensive Medicine

The recent health care debate has completely ignored one of the major health care cost drivers: defensive medicine. Writing in The Hill, Dr. Jeff Segal states why the Affordable Care Act will do little to reduce healthcare spending:

One reason, according to Gallup, is that one in four healthcare dollars in America is spent on defensive medicine. Defensive medicine occurs when doctors order more tests and procedures — such as CT scans, blood work and biopsies — than are medically necessary to keep from being sued. This costs consumers as much as $650 billion annually.

In Texas, 79 percent of physicians said they practice defensive medicine compared to 81 percent in all states. This despite comprehensive legal reform adopted in 2003 that included much-acclaimed limits on non-economic damages, something known as “pain and suffering.”

Segal suggests a better system:

We need a non-adversarial system that quickly and fairly processes claims. Patients for Fair Compensation is currently proposing such a plan to lawmakers in several states.

This no-fault system would create a predictable model where patients would know their cases would be heard. Doctors would know they wouldn’t be hauled into court. The system would provide more injured patients compensation. They would receive predictable settlements in much faster time. Patients would endure fewer needless tests and procedures. Healthcare costs would drop as physicians’ livelihoods would no longer be on the line with every patient.

Finally, Segal cites an actuarial study that estimates this type of comprehensive, non-adversarial plan would save at least $2.6 trillion over 10 years.

Taxpayers would save $700 billion on Medicare and a similar amount on Medicaid. That’s an enormous reduction in healthcare spending – a sum that politicians will not find with any of the current or proposed solutions for health reform.

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