Flogging a Dead Warhorse

Charles Krauthammer is out this morning with a column of predictably conservative answers to the health care crisis, and leading off with the requisite genuflect: “The United States has the best health care in the world…”

“If you can afford it,” he doesn’t say.

The House and Senate bills are “monstrous,” and will result in “an overregulated, overbureaucratized system of surpassing arbitrariness and inefficiency.”

Krauthammer trots out the familiar war horses, including allowing interstate purchase of insurance policies and including eliminating the tax breaks for employer-provided health insurance.

But his number one prescription for reforming health care is tort reform. Half a trillion per decade, Krauthammer claims, is wasted to “jackpot lawsuit winners” and defensive medicine. (“Half a trillion” per decade sounds more imposing than $50 billion per year in a $2 trillion industry.)

In response, here is part of an unpublished piece I wrote in 2005 on the subject of why conservatives believe tort reform is the foremost prescription for curing the illness (biologics aren’t the only things that are evergreen):

For one, it publicizes GOP concern for your health care costs and how they — not those other guys — offer a neat, plausible solution: limiting personal injury lawsuits and capping noneconomic damage awards.

Second, it provides convenient scoundrels to blame for high insurance costs: the much-vilified trial lawyers. Since they typically support those other guys, “trial lawyers” is code-speak for Democrats, guaranteed to draw boos from pre-screened, “town hall” audiences.

Third, limiting “runaway jury” awards reduces the funds such attorneys have to donate to Democrats. (As Texas governor, the president trusted over 160 death sentences from citizen juries, but it’s different when money is on the line.)

Best of all, it panders to insurance companies and their platoons of lobbyists — big Republican donors. Capping awards improves the actuaries’ bottom line, meaning more money they can donate to the GOP in a patriotic expression of corporate free speech.

Malpractice cases can cost upwards of $100,000 to bring to trial. The proposed $250,000 cap on noneconomic damages means (even assuming attorney’s fees as high as 40 percent) only break-even money ($100,000) for these small businesspeople, assuming they win. Few will risk working your case unless you are a CEO who might recover millions in lost wages (economic losses).

The injured who suffer smaller economic losses — low-wage workers, many women, children, and senior citizens — will be shut out. It’s already happening already in states with caps. Fewer lawsuits (and less accountability) means yet more money the insurance industry will have to donate to the GOP in a patriotic.… You get the idea.

And you thought Willy was the slick one.

It’s a clever strategy by shrewd salesmen. What does tort reform have to do with lowering your medical costs and improving health care? Doodly squat.

The Congressional Budget Office estimates that award caps might reduce health care costs by one percent. During a Bush infomercial in Cleveland on January 27, the president suggested that improved information technology could reduce health care costs by 20 percent. So why waste time on the one-percent solution? The reasons why are listed above.

The reason, Krauthammer suggests, for why no tort reform provisions appear in the bills is that trial lawyers contribute heavily to Democrats. He’s right — not that including a tort reform provision would coax a single Republican to vote for the final bill. Perhaps tort reform should be included, as Krauthammer suggests, among those reforms to be addressed “one reform at a time.”

No one is defending so-called frivolous lawsuits. It’s just that they are not a major factor for lowering costs. But remember, the explosion in malpractice insurance costs parallels the explosion in health insurance costs. It may not be a coincidence that the common denominator is insurance companies.