On the November 4 and November 11 editions of FOX News Channel's The O'Reilly Factor, host Bill O'Reilly erroneously blamed medical malpractice lawsuits for soaring health care costs, claiming, "If you lowered the medical malpractice, all -- everything would come on down." Those who advocate putting caps, or limits, on medical malpractice awards point primarily to two factors they say drive up health care costs: increases in medical malpractice insurance premiums resulting from large amounts of money being awarded in malpractice suits and the practice of "defensive medicine" (the overprescription of tests and treatments as a hedge against malpractice claims). But the Congressional Budget Office has found that neither of these factors appears to affect health care costs.
From the November 11 edition of The O'Reilly Factor:
O'REILLY: Don't you think tort reform would take care of that? ... If you lowered the medical malpractice, all -- everything would come on down.
From the November 4 edition of The O'Reilly Factor:
O'REILLY: But the only way that works is if you get the medical malpractice lawyers under control. ... That's No. 1. You can't get health care costs under control unless you stop the chaos in the court system. You can't!
- Malpractice premiums: As Media Matters for America has noted, the Congressional Budget Office (CBO) has documented the minimal impact that increases in medical malpractice insurance premiums have on overall health care costs. A 2004 CBO report concluded that capping awards at $250,000 for non-economic damages in medical malpractice lawsuits "would basically save only 0.4 percent of the amount that's spent now" on health care. According to the report, "[M]alpractice costs amounted to an estimated $24 billion in 2002, but that figure represents less than 2 percent of overall health care spending. Thus, even a reduction of 25 percent to 30 percent in malpractice costs would lower health care costs by only about 0.4 percent to 0.5 percent, and the likely effect on health insurance premiums would be comparably small."
- Defensive medicine: As FactCheck.org has noted, claims that "defensive medicine" drives up medical costs -- a principal Bush administration argument for tort reform -- have been dismissed as inconclusive by the General Accounting Office (GAO) and the CBO. The CBO went further, declaring that there is "no evidence that restrictions on tort liability reduce medical spending."
According to a July 2002 report issued by the Department of Health and Human Services (HHS):
Defensive medicine that is caused by unlimited and unpredictable liability awards not only increases patients' risk but it also adds costs. The leading study estimates that limiting unreasonable awards for non-economic damages could reduce health care costs by 5-9% without adversely affecting quality of care. This would save $60-108 billion in health care costs each year. These savings would lower the cost of health insurance and permit an additional 2.4-4.3 million Americans to obtain insurance.
But as FactCheck.org noted, the "leading study" referenced in the HHS report is a 1996 paper by Stanford University economists Daniel P. Kessler and Mark McClellan. As FactCheck.org noted, McClellan recently served as President George W. Bush's senior White House policy director for health care and is now commissioner of the Food and Drug Administration.
Although the Kessler-McClellan study won the 1997 American Economics Association's award in health economics, the Government Accounting Office and the Congressional Budget Office have since dismissed its findings as inconclusive.
From a January 29, 2004, article on FactCheck.org:
In 1999 a GAO study said the evidence Kessler and McClellan cited was too narrow to provide a basis for estimating overall costs of defensive medicine:
Because this study was focused on only one condition and on a hospital setting, it cannot be extrapolated to the larger practice of medicine. Given the limited evidence, reliable cost savings estimates cannot be developed.
And on Jan. 8, 2004, the Congressional Budget Office also said the Kessler-McClellan study wasn't a valid basis for projecting total costs of defensive medicine.
When CBO applied the methods used in the study of Medicare patients hospitalized for two types of heart disease to a broader set of ailments, it found no evidence that restrictions on tort liability reduce medical spending. Moreover, using a different set of data, CBO found no statistically significant difference in per capita health care spending between states with and without limits on malpractice torts.