Many frequently blame rising healthcare costs on lawsuits and malpractice insurance. Arguments typically revolve around “defensive medicine” and cite statistics about increasing amounts of medical malpractice lawsuit payouts, and how those factors must be affecting healthcare costs across the board. The only problem is that the data doesn’t support the typical narrative – at least not in the last decade.
The National Practitioner’s Data Bank 2012 annual report noted that “between 2003 and 2012, the number of medical malpractice reports decreased 34 percent, declining steadily from 18,535 to 12,152.” The same data show “the inflation-adjusted total value of payments made on behalf of doctors in 2011 was the lowest on record,” and that medical malpractice payments were “just 0.12 percent of national health care costs” in 2011.
Doctors have also started to weigh in. David Belk, a California physician practicing internal medicine has go so far as to post his annual medical malpractice insurance statement online – $3,459 in 2013. In New York, however, that premium would jump to over $7,000 in the Rochester area, and over $37,000 on Long Island. The discrepancy is the result of a number of factors, but the risk of malpractice is similar regardless of location. He explains that, “more and more, insurance companies are scrutinizing every test you order,” adding that most doctors are more concerned with the patient than liability. “I don’t think the threat of malpractice is more important than the threat of being wrong in a very important decision.”
Caps on lawsuit payouts have little impact on costs, since the contingent fee system for attorneys already filters cases that are unlikely to succeed, and the cost of litigation already prevents most attorneys from taking smaller value cases.
So, if malpractice and lawsuits are not to blame, what is? “American Health Insurance Plan, an insurance industry trade association that believes defensive medicine is part of the problem, cites a litany of other suspects: higher prices for services, a system that pays for volume over value, adopting new technology without considering effectiveness and a lack of transparency that prevents people from understanding how the market is, or isn’t, working.”