malpractice

Gingrich and Perry Tout Texas Health Care Mess

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Everything, they say, is bigger in the Texas. So it is with the failure of the health care system. Leading the nation with a jaw-dropping 25% of its residents uninsured, Texas ranked 46th in the Commonwealth Fund's 2009 scorecard of state health care performance. All of which makes Friday's op-ed by Newt Gingrich and Governor Rick Perry touting the mess in Texas all the more puzzling.

Just two days after the CBO dismissed a House Republican plan that would barely dent the rolls of the uninsured, Perry and Gingrich blasted Democratic health care reform in a Washington Post screed titled, "Let States Lead the Way." Besides dredging up Newt's worn out 1990's vintage talking points on unfunded mandates, the duo insist it is the Lone Star State which should be at the front of that vanguard:

Texas, for example, has adopted approaches to controlling health-care costs while improving choice, advancing quality of care and expanding coverage. Consider the successful 2003 tort reform. Fewer frivolous lawsuits have attracted record numbers of doctors to the state as medical malpractice insurance premiums dropped by half. Christus Health, a large Catholic nonprofit system with a significant presence in Texas, spent about $100 million on liability defense payments in 2003. Last year, Christus spent $2.3 million on such payments. Much of that savings has gone into expanding health-care services in low-income neighborhoods.

As the Post's Erza Klein asks, "how's that working out?"

The answer, of course, is quite poorly. While from 2007 to 2009 Texas nudged its way from a horrific 48th to a merely miserable 46th in the Commonwealth Fund rankings, the health care system there remains an ongoing calamity for its residents. Among the poster children for the failure of red state health care, Perry's state brought up the rear across the five indicators measured. When it comes to health care access and equity, Texas is dead last. (See table above.)

While it is predictable that Republicans Gingrich and Perry cite Texas' draconian tort reform law as an example for the nation, the data is far from clear as to its benefits in actually reducing malpractice premiums, lowering costs and attracting physicians to the underserved state.

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In the wake of its shocking assessment that employer-provided health insurance now covers only 54.6% of the American people, Thomson Reuters released a disturbing assessment of wasteful spending in the U.S. health care system. Echoing the estimates of Obama OMB chief Peter Orszag and others, the analysis highlighted by Keith Olbermann Tuesday concluded that the United States wastes up to $700 billion a year - a third of the nation's total $2 trillion health care spending.

As Robert Kelley, vice president of healthcare analytics at Thomson Reuters and author of the white paper, put it:

"The bad news is that an estimated $700 billion is wasted annually. That's one-third of the nation's healthcare bill. The good news is that by attacking waste, healthcare costs can be reduced without adversely affecting the quality of care or access to care. That's the point of this report - to identify areas in the healthcare system that can generate game-changing savings."

Those game-changing savings, TR found, could be found across a broad range of health care spending. Between $600 billion and $850 billion, it estimated, is wasted on:

  • Unnecessary Care (40% of healthcare waste): Unwarranted treatment, such as the over-use of antibiotics and the use of diagnostic lab tests to protect against malpractice exposure, accounts for $250 billion to $325 billion in annual healthcare spending.
  • Fraud (19% of healthcare waste): Healthcare fraud costs $125 billion to $175 billion each year, manifesting itself in everything from fraudulent Medicare claims to kickbacks for referrals for unnecessary services.
  • Administrative Inefficiency (17% of healthcare waste): The large volume of redundant paperwork in the U.S healthcare system accounts for $100 billion to $150 billion in spending annually.
  • Healthcare Provider Errors (12% of healthcare waste): Medical mistakes account for $75 billion to $100 billion in unnecessary spending each year.
  • Preventable Conditions (6% of healthcare waste): Approximately $25 billion to $50 billion is spent annually on hospitalizations to address conditions such as uncontrolled diabetes, which are much less costly to treat when individuals receive timely access to outpatient care.
  • Lack of Care Coordination (6% of healthcare waste): Inefficient communication between providers, including lack of access to medical records when specialists intervene, leads to duplication of tests and inappropriate treatments that cost $25 billion to $50 billion annually.

But in its catalog of health care spending horrors, however, Thomson Reuters may have understated potential savings in one area while overstating them in another.

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Republican Malpractice Myths

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In recent days, Republican leaders have scored a series of political victories in their eternal quest for tort reform. Last week, the Congressional Budget Office (CBO) told Senator Orrin Hatch (R-UT) that an onerous package of malpractice curbs he championed could save the government an estimated $54 billion over 10 years. That came on the heels of President Obama's latest offer to support limited tort reform as an olive branch to recalcitrant Republicans balking at his health care proposals, including funding for a $25 million pilot program.

But largely overlooked in the heated discussions of damage award caps, special health courts, expert panels and national compensation schedules is the inescapable truth that the medical malpractice system has only a negligible impact on overall American health care costs. Republican horror stories of a torrent of baseless malpractice suits producing "jackpot justice" that fuels rising premiums for physicians and patients alike while driving doctors from practice simply don't comport with reality. The overstated, overblown, over the top and often outright false GOP claims suggest that the Republicans' real target is not the flawed American malpractice system, but instead the nation's trial lawyers whose campaign contributions help bankroll the Democratic Party.

Here, then, is a look at Republican Malpractice Myths:

  1. An Explosion of Malpractice Litigation
  2. A System Plagued by Frivolous Lawsuits
  3. Rising Damage Awards Key to Higher Malpractice Premiums
  4. Rising Malpractice Insurance Rates Driving Doctors from Practice
  5. Medical Malpractice Reform Would Save U.S. $200 Billion Annually
  6. Defensive Medicine Costs $200 Billion a Year

For the details and data behind each, continue reading.

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Senators Orrin Hatch (R-UT) and John Kerry (D-MA) talked about the process of health care reform on Sunday :

STEPHANOPOULOS: These insurance reforms, you can't be denied health care if you're sick. You can't get thrown out if you're sick.

A lot of Democrats, Republicans say that maybe we should have this individual mandate, to require people to buy insurance, to couple that with reforms.

Bill Bradley points out today, I think it was in The New York Times, that, you know, maybe they should include some malpractice reform as well. Are they -- those three things the building blocks of a deal?

HATCH: Yes, they really are. You know, Democrats have been unwilling to take on the personal injury lawyers. And look, there are cases that really deserve huge rewards, huge judgments.

We've got to find some way of getting rid of the frivolous cases, and most of them are. Most of them are brought...

KERRY: And that's doable, most definitely.

HATCH: Yes, and that's doable. Most of them are brought to -- you know, to get the defense costs. They know that once they bring them, the insurance companies are going to have to pay their defense costs rather than take a chance at a runaway jury.

But it's not just that. It's the other elements you've been talking about too. Those are three very important...

Let's just wait one minute here. Bill Bradley? Although he has a reputation as a liberal's liberal, Bradley has never met a tax cut he didn't like. And when he starts talking about malpractice reform in exchange for healthcare reform, what he's talking about once again is ordinary people giving up another degree of security and protection against powerful forces to meet some politician's ideal of centrist compromise.

When approximately five percent of all doctors are responsible for 95% of all medical malpractice, how is that a legal problem? I'll accept limitations on malpractice awards when we have a national health care system that pays for every service someone needs to deal with with the outcome of bad medicine. Until then, I'll keep my torts, thank you.

STEPHANOPOULOS: And then if you add some subsidies to that that move towards covering more people...

KERRY: Yes, which I think we have some -- actually, I think we have some flexibility on as to sort of the rate and manner in which you do that. So I think that there are ways to do this, George.

As a member of the Finance Committee, I've been part of this discussion, though many of us would like to see it broadened in some ways. I'd like -- I mean, you know, my question to Orrin and to others is, you know, who is the Republican? Who are the Republicans, plural, who are prepared to step up and do as Ted Kennedy would have done here?

STEPHANOPOULOS: You were part of the negotiations earlier this year but then stepped away. Are you ready to come back?

HATCH: Sure. I've always been ready to do that. But look, you talk about an individual mandate. The problem with an individual mandate is that the people who are really hurt the most are those on the lower end of the wage spectrum.

They either lose their jobs, a cutback in pay, or the company goes overseas. Once you start doing that -- because the theory behind that is that you've penalized the company if they don't provide insurance for their people by having them have it surcharged.

And look, let's just be honest about it, it's a very difficult thing to do. There are some ways we could do this, none – both sides...

KERRY: Actually, Orrin...

HATCH: Both sides are arguing for insurance reform. That's not the issue. The issue is, how do we put all of these elements together?