The Cost of Defensive Medicine

David Leonhardt reviews research on malpractice and finds what I have been saying. Malpractice does not have the effect on health care costs which many conservatives claim and even the total elimination of malpractice would only have a modest affect on costs. However,  malpractice, primarily due to defensive medicine, does result in unnecessary expenses which we still should try to recover to attempt to pay for the current health care reform measures. Leonhardt writes:

The direct costs of malpractice lawsuits — jury awards, settlements and the like — are such a minuscule part of health spending that they barely merit discussion, economists say. But that doesn’t mean the malpractice system is working.

The fear of lawsuits among doctors does seem to lead to a noticeable amount of wasteful treatment. Amitabh Chandra — a Harvard economist whose research is cited by both the American Medical Association and the trial lawyers’ association — says $60 billion a year, or about 3 percent of overall medical spending, is a reasonable upper-end estimate. If a new policy could eliminate close to that much waste without causing other problems, it would be a no-brainer.

At the same time, though, the current system appears to treat actual malpractice too lightly. Trials may get a lot of attention, but they are the exception. Far more common are errors that never lead to any action…

Medical errors happen more frequently here than in other rich countries, as the Robert Wood Johnson Foundation recently found. Only a tiny share of victims receive compensation. Among those who do, the awards vary from the lavish to the minimal. And even though the system treats most victims poorly, notes Michelle Mello of the School of Public Health at Harvard, “the uncertainty leads to defensive behavior by physicians that generates more costs for everyone.”

It should also be noted that often errors are not addressed because medical institutions are afraid that admitting errors will subject them to suits. Reforming our current system would be helpful in reducing true medical errors.

While I agree with Leonhardt’s general findings on malpractice, I would caution the exact amount spent on defensive medicine is very hard to measure. There will be honest disagreement as to what tests are legitimate and which are examples of defensive medicine. Habits also die hard. Studies based upon a reduction in defensive medicine after changes in laws will not be exact as it will take time for physicians to change their habits even if the threat of malpractice is removed. Unfortunately this also means that, while we should pursue such savings, they might not amount to as great a number in the short run as many believe.

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7 Comments

  1. 1
    Bestcelebrity says:

    First, $250,000 is just a number. A $250,000 cap may not be sufficient but we should consider some sort of cap to lower healthcare costs. Also, this cap only limits damages awarded for pain and suffering and not money for medical care costs, disability, additional assistance, etc.Gross negligence does need to be remedied, but we should prevent negligence not apply fees after the fact. Increasing the damages a doctor must pay won’t make the patient better. Instead we should push for better training, assessment, and supervision for doctors to prevent negligence.Also, though a few hundred people benefit from malpractice lawsuits, 300 million people benefit from reductions in insurance premiums, government healthcare expenditure, and medical bills. Nearly 45 million Americans don’t have health insurance, and even the government lacks the financial means to help them. Doctors would benefit from a reduction in malpractice damages, but so would the countless people who visit them.

  2. 2
    Eclectic Radical says:

    It’s worth noting that ‘unnecessary’ tests are tests that come back negative and ‘unnecessary’ treatments are treatments that one discovers are for the wrong condition after the fact. While I am sure there are a certain number of truly unnecessary tests and treatments performed for defensive reasons, I’d also be willing to bet that there is a lot of ‘unnecessary’ medical action taken that fits the symptoms and would be pretty damn necessary if the action wasn’t taken and it turned out the condition tested for or treated was in fact the problem.
     
    I’m not a doctor, but it appears to me entirely logical that there would be situations where a precise diagnosis was not yet possible but some kind of immediate treatment was necessary. In such a situation, a doctor has to make his best guess. I know there are plenty of conditions with enough overlapping symptoms that a few ‘unnecessary’ tests might be necessary along with the ‘necessary’ test. This all appears to be basic logic to me.
     
    So sometimes, there is no way of knowing a test is ‘unnecessary’ until it comes back negative.
     

  3. 3
    Ron Chusid says:

    Necessity of a test is not judged by whether they come back positive or negative. Many tests which come back negative are considered necessary.

  4. 4
    Ron Chusid says:

    “Instead we should push for better training, assessment, and supervision for doctors to prevent negligence”

    That would have minimal impact. There are a few bad doctors who are responsible for a meaningful number of errors, and some manage to escape being weeded out. Far more often errors occur to system problems, not doctors who didn’t have sufficient training, etc.

  5. 5
    Eclectic Radical says:

    ‘Necessity of a test is not judged by whether they come back positive or negative. Many tests which come back negative are considered necessary.’
     
    This is sort of what I was saying. How many ‘necessary’ tests are being counted as ‘unnecessary’ in retrospect by the people compiling the statistics. The answer to that question could make a significant difference in policy decisions and their actual effects.
     

  6. 6
    Ron Chusid says:

    Counting unnecessary tests is difficult as there will be disagreement as to which are necessary but I doubt anyone studying this would consider using whether a test comes back positive or negative as the criteria.

  7. 7
    Eclectic Radical says:

    ‘Counting unnecessary tests is difficult as there will be disagreement as to which are necessary but I doubt anyone studying this would consider using whether a test comes back positive or negative as the criteria.’
     
    Certainly not the sole criteria. But tests that come back positive (barring false positives, later caught) are not likely to be included on any ‘unnecessary’ list at all. Therefore it is fair to say that only negative tests would be considered as potentially unnecessary. So it’s certainly a factor in the process. I think it’s also fair to say that cases where doctors order many tests for a patient are likely to attract the most scrutiny. It may not be an easy thing for people to determine what was and was not necessary in the doctor’s eyes before the fact.
     

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