Tort reform has not reduced health care costs in Texas

Back at the end of March, I drew attention to the fact that a federal judge had upheld Texas’s 2003 cap on non-economic damages (tort reform) for medical malpractice lawsuits.    Proponents of such caps often argue that they can make health care less expensive overall, because malpractice premiums will drop and doctors will practice less defensive medicine due to the fact that their fears of potential multi-million dollar malpractice settlements will be abated.  In addition, more doctors will theoretically relocate to states that have tort reforms in place.

A new study has been published in Volume 9 of the Journal of Empirical Legal Studies that looked at Medicare spending in Texas between 2002-2009.  Keep in mind that the tort reform legislation was passed in 2003, so there are roughly 2 years of “control” data in the study.  The study found no reduction in Medicare spending and in fact showed that Medicare payments to Texas doctors increased 1-2% faster than the rest of the country.  In addition, the researchers say that Medicare spending increased everywhere, including the 30 states in which tort reform is on the books.

As far as whether more doctors have flocked to Texas to practice, after controlling for appropriate factors, an upcoming study by the same researchers reportedly will show that the number of doctors involved in direct patient care grew more slowly after tort reform and that Texas attracted slightly fewer doctors than other states.

This is not the first study that has looked at the effect of Texas’ tort reform law.  Ralph Nader published a study over at Public Citizen in October 2011 that showed Texas went from 7th in the country to 2nd with respect to Medicare spending between 2003-2009, private health insurance premiums increased more than the national average and that Texas has the highest uninsured rate in the country.  Additionally, while physician’s malpractice premiums have dropped 50%, insurance company payouts have dropped even more, indicating insurance companies are reaping serious financial benefits from the law.  There is more to the Nader report than I have outlined here; I suggest readers take a quick look at it.

Medical malpractice is a very complicated subject that will likely require a complicated solution to balance the needs of physicians and the health care system at large with patients who truly are victims of serious malpractice.  As a result of tort reform, many patients are having extreme difficulty and sometimes are completely unable to find an attorney who will represent them.  I completely agree that frivolous lawsuits need to be done away with, but there are many patients out there who have been seriously injured by poor medicine for whom the limited awards will not suffice.

So far, it does not appear as though tort reform in Texas has delivered on all of the promises advocates of the legislation made at the time of its passage.  Whether states considering passing similar legislation or amending pre-existing tort reform law will use the information contained in this study remains to be seen.  I honestly hope a solution that is fair to all involved can be found.

 

From The Austin Statesman:

A new study found no evidence that health care costs in Texas dipped after a 2003 constitutional amendment limited payouts in medical malpractice lawsuits, despite claims made to voters by some backers of tort reform.

The researchers, who include University of Texas law professor Charles Silver, examined Medicare spending in Texas counties and saw no reduction in doctors’ fees for seniors and disabled patients between 2002 and 2009. A 2003 voter campaign in Texas, and some congressional backers of Texas-style tort reform in every state, however, argued that capping damage awards would not only curb malpractice lawsuits and insurance costs for doctors, it would lower costs for patients while boosting their access to physicians.

Tort reform is a controversial topic likely to be resurrected by Republicans and doctors’ groups who hoped to make it part of the 2010 federal health care law.

The researchers’ findings come after a report last fall in which the Ralph Nader-founded consumer group Public Citizen said it found Medicare spending in Texas rose much faster than the national average after tort reform. Critics of that study said that tort reform leaders never promised health care spending would decline and noted that caps on damage awards brought steep drops in malpractice insurance rates for doctors and large increases in new doctors coming to Texas.

Another study yet to be published on physician supply and tort reform, also by Silver’s group, agrees that malpractice suits and payouts sharply dropped after tort reform. But that study strongly disputes claims of a mass exodus of Texas doctors before tort reform and huge increases afterward.

On the question of health care costs, Silver’s group focused on the federal government’s Medicare program, which makes up 20 percent of the $2.5 trillion spent on U.S. health care.

That group — consisting of two Republicans, a Democrat and a foreign national, according to the researchers — analyzed data at the county level in Texas, said Tom Baker, author of a 2005 book, “The Medical Malpractice Myth,” and a professor of law and health sciences at the University of Pennsylvania.

“This is a very highly regarded study, and this team is highly regarded,” Baker said. The study was paid for by the researchers’ universities, Silver said, and the paper was published this month in the Journal of Empirical Legal Studies.

“Their results didn’t surprise me at all,” Baker said.

Medicare spending up

The researchers assumed that doctors who faced a higher risk of being sued — those in counties that had larger numbers of malpractice cases — would perform more tests and procedures than necessary to protect themselves from lawsuits. With tort reform, which limited damage awards against doctors, the need to practice such “defensive medicine” would decline, the argument goes.

But in comparing Texas counties in which doctors faced a higher risk of lawsuits with counties where the risk was lower, the researchers found no difference in Medicare spending after tort reform and indications that doctors in higher-
risk counties did slightly more procedures.

“If tort reform reduces spending, it would have the biggest effect on high-risk counties,” Silver said. He noted that those tend to be large and urban.

“This is not a result we expected,” said Bernard Black, a co-author and a professor at Northwestern University’s Law School and Kellogg School of Management.

Health care spending has increased annually everywhere, the researchers said, including in the states with caps on malpractice payouts — now at 30, counting Texas, said David Hyman, a co-author and professor of law and medicine at the University of Illinois.

But, said Hyman, who worked on health policy for President George W. Bush at the Federal Trade Commission, “we found no evidence that Texas spending went up slower in comparison to all other states and may have had an increase.”

The researchers said their study suggests that Medicare payments to doctors in Texas rose 1 to 2 percent faster than the rest of the country, Black said.

Since tort reform, some Texas residents have complained that they cannot find a lawyer to pursue a malpractice case because of the $750,000 cap on payouts for pain, suffering, disfigurement and mental anguish. The limit often makes litigation cost prohibitive, patients and lawyers said. That concern was not raised in the paper, although the researchers said claims of huge malpractice payouts and rampant “frivolous” lawsuits before tort reform are greatly exaggerated by its advocates.

Silver said he was “very pessimistic” that policymakers will heed the study. “The rhetoric on both sides tends to be very extreme,” he said.

Numbers of doctors

Jon Opelt, executive director of Texas Alliance for Patient Access, said tort reform in Texas has benefited patients by adding nearly 5,000 more physicians than can be accounted for by population growth. Opelt also said that patients have greater access to specialists in high-risk fields of medicine, and more emergency room doctors are willing to be on call because their fears of lawsuits have been reduced.

Before the 2003 reforms, “55 Texas counties saw a net loss of physicians and … some 99 counties lost a high-risk specialist,” Opelt said. “An estimated 5,000 high-risk specialists restricted their practice due to liability concerns.”

Silver and his fellow researchers’ unpublished study says Texas Medical Board data that Opelt cites on new physician applications and licenses do not account for doctors who left the state or retired, creating vacancies for their jobs; physicians who don’t treat patients but do research or administrative work; and physician growth compared with other states. When those factors are weighed, Texas saw the number of direct patient care doctors grow more slowly after tort reform than it did before, the study says. Afterward, Texas did slightly worse than other states in attracting doctors, the study says.

Linking tort reform to the health care costs is a “straw argument,” Opelt wrote in an email, saying his group never promised that. He noted the study says there could be an effect on health care spending in the future.

“We did not and we have not led lawmakers and voters astray,” he said.

Opelt’s group was the largest contributor to a campaign to persuade voters to approve tort reform, Yes on 12, donating $1.2 million.

“Yes on 12″ materials said consumers should expect health costs to go down. “Your YES vote on Proposition 12 means: Lower costs and more security in our health care system,” one flier says. Another, in the form of a letter from Gov. Rick Perry, says that “Texans can help make health care more affordable and accessible” by voting for tort reform.

Opelt said his group had nothing to do with the fliers and directed questions to campaign leader Ted Delisi. He did not return a call.

The governor issued a statement through spokesman Josh Havens calling tort reform “a huge success.”

via New study: Tort reform has not reduced health care costs in Texas

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