11.30.2009 0

Too Hot Not To Note: House bill punishes states with capped medical lawsuit costs

  • On: 12/04/2009 09:32:10
  • In: Health Care

  • ALG Editor’s Note: In the following featured editorial, The Detroit News points out that the current form of the House bill with punish states with medical lawsuit caps.

    Editorial: House bill punishes states with capped medical lawsuit costs

    The U.S. Senate is debating health care reform. So far, there hasn’t been any serious discussion about limiting the cost of medical malpractice lawsuits to save money for the health care system. The bill passed by the U.S. House is worse. It punishes those states, such as Michigan, that have adopted caps on “pain and suffering damages” and limit attorneys’ fees in malpractice cases.

    It would be entirely unreasonable for any bill that emerges from Congress that purports to reform health care to impose a cost on states’ efforts to limit lawsuit costs.

    More than two dozen states have adopted liability caps of some kind. This year, the general cap on pain and suffering damages in Michigan is $431,300, and the upper limit is $733,500. The caps are adjusted annually for inflation.

    Attorneys fees based on damages received in civil lawsuits are limited to a third of the total under Michigan court rules.

    The costs of continuing care and loss of income are still left to a jury to determine.

    The caps were adopted in response to rising medical malpractice premiums. Relative to other Upper Midwest states, Michigan physicians were paying many more claims than their neighbors. Nationally, medical lawsuits have been estimated to impose billions of dollars in costs on the health care system.

    The consulting firm Towers Perrin estimates that the national cost of medical malpractice suits was $30 billion in 2007. The Congressional Budget Office, the Wall Street Journal reports, has estimated savings from lawsuit limits at $54 billion over a decade, but Price Waterhouse Cooper, another consulting firm, has placed the cost of defensive medicine in the form of extra tests and procedures because of the threat of lawsuits at $240 billion last year.

    Yet the House bill has a section that, while ostensibly encouraging alternative dispute resolution of medical lawsuits with “incentive payments” from the federal government, specifically bars any system with damage caps or attorney fee limits from eligibility for the incentive payments.

    This section of the House bill is clearly more concerned with protecting trial lawyers than it is about controlling health care costs.

    That’s not the kind of result Americans will be looking for in legislation claiming to reform health insurance and the health care system.

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