Tort Reform Will Not Fix Health Care Problems

The Bozeman Daily Chronicle, which is kept behind a subscription wall, today ran an editorial that has me scratching my head – it is one long non sequitur.

The piece is about our health insurance system – it is titled “Insurance Costs Just a Symptom of a Sick System”. They do a good job of summing up the problem:

It’s a rare and well-heeled patient who can write a check for even day-to-day health care needs, much less the emergencies and serious illnesses that come along. All the rest of us need some sort of health care insurance to soften the blow. Most of the time, that insurance is a benefit of employment. Others tiptoe through life with no means of paying for a catastrophe, hoping and praying that they make it through one more month without paying a doctor bill.

That is fairly well dead-on, and I’m with them so far. Next they talk about Insure Montana, a program in which I participate, and Blue Cross Blue Shield’s recent statement that they intend to raise premiums by 32%.

That will put insurance costs out of reach for some small businesses and their employees … again. Even those who keep their plans will get fewer benefits and higher deductibles and co-pays.

Insure Montana was a way of offering small businesses, including independent contractors, affordable insurance. Apparently the effort has failed – BCBS says that they encountered some very high individual cases that absorbed much of the fund’s resources. It probably suffers from the basic defect of insurance in general – adverse selection. People who sought out this program were probably otherwise turned down for health insurance, and are a high risk pool.

Anyway, so far, I’m with the Chronicle. It’s s shame the program is not working, that we are back at square one – unaffordable insurance, uninsured people.

Then they veer right. Way right.

The root of the problem is not people who go to the doctor too frequently. And more government interference is not the solution. If Congress and the Legislature want to get involved, they can start with tort reform.

There are so many levels on which to attack this silly statement – just the obvious: If government interference is not the solution, why do you advocate government interference in lawsuits and settlements in the form of caps? Isn’t that, like, massive interference?

And what, pray tell, is the exact relationship between Insure Montana’s problems and tort reform? (Hint – if you guessed “none”, you score a point. This is classic non sequitur.)

And what is the relationship between rising medical costs and legal settlements (“frivolous” lawsuits)? As John Kerry stated in one of the presidential debates in 2004, medical malpractice suits contribute less than 2% of the rising cost of health care. The problem is this: We are getting better at what we do. Newer and better machines and procedures squeeze out old ones. People with insurance automatically avail themselves with the best and the newest, and costs rise accordingly.

The solution – spread the cost over a wider pool of people – define the health insurance pool as “all of us”. It works in every other industrialized country. It’s not been tried here because of the power of the medical sector, and its support from people like Stephanie Pressley, Bob Gibson, Bill Wilke, Karen Rannow and Christine Uthoff, the editorial board of the Bozeman Daily Chronicle.

Tort reform is cynical – the right has taken a problem that affects us all deeply, and has crafted a solution that benefits its wealthiest members. If we get tort reform, the wealthiest doctors and medical insurance and health corporations will be protected from high settlements for punitive damages. Health care costs will continue to skyrocket. And the right will be out of solutions.

So we’ll just have to live with the problem. It’s all they’ve got for a solution. They are bankrupt.

About Mark Tokarski

Mostly retired CPA living the life here in Colorado. Formerly Montana, 59 years, which is why so much of this blog is devoted to Montana issues.
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5 Responses to Tort Reform Will Not Fix Health Care Problems

  1. NMN says:

    “Newer and better machines and procedures squeeze out old ones. People with insurance automatically avail themselves with the best and the newest, and costs rise accordingly.”

    Wrong. Doctors, not patients, order the best and newest procedures and tests. Doctors do that to avoid malpractice suits. The solution is to spread the cost of malpractice insurance over the a wider pool of people, namely, everyone, whether they go to the doctor or not.

    Quoting John Kerry destroyed your credibility, by the way.

  2. In your mind only. Having been only a reluctant supporter of John Kerry in 2004, I found him in the area of health care to be credible, Bush not.

    Once a procedure or machine comes along that fixes a problem that could not be fixed before or alleviates a condition not affected before, that machine or procedure becomes the norm. Patients avail themselves of it – doctors who don’t use the newer technology will lose patients. Your argument is a distinction without a difference.

  3. Bob says:

    Drugs + surgery = health? The med-industry has everyone arguing about different “health care” systems because they own the game, no matter who pays for it. Doctors in hospitals get annual bonuses for increased numbers of “units” in their “care,” not people. Follow the money. What’s health got to do with it?

  4. Nima Taradji says:

    “Wrong. Doctors, not patients, order the best and newest procedures and tests. Doctors do that to avoid malpractice suits.”

    Wrong. Doctors use the best procedures available, not so much as to avoid malpractice lawsuits, but to heal their patients. That is their job and the oath they have taken.

    Tort reform argument is simply a red herring.

  5. DJ says:

    In 1990 third parties paid 77 cents of each dollar of medical expense. Because patients pay an average of only 23 cents on each dollar of medical expense, there is only a weak linkage between any consumer’s use of medical resources and the payments made by that consumer. When the direct linkage between use of medical facilities and payment is broken, medical consumers lose their incentive to economize on their use of medical resources.
    • The first, and by far the largest excess cost, is due to the current overuse of medical resources by patients. Overuse is the rational response of consumers who do not have to pay the entire cost of the medical services they use. The causes of those excess costs are Medicaid, Medicare, and tax laws that provide incentives for individuals to have their employers purchase their medical care in the form of private health insurance.
    • The second category of excess cost consists of administrative and paperwork costs that are unnecessary for the provision of health care, but that have come into existence because of the current patchwork of third-party payers and their attempts to control their increasing costs by closely monitoring the behavior of doctors and patients. Even worse is the fact that those cost-containment activities do not seem to have contained costs very well.
    • The third excess cost is associated with the fear of malpractice suits. Administering medically unnecessary tests and procedures helps to insulate doctors and hospitals from the potential wrath of patients or their families when inevitable accidents occur in medical treatment or when treatments just do not work.
    The combination of an increase in medical knowledge and the differential payment for specialists as compared to general practitioners led to an increase in medical specialization. The increasing costs of both college and medical school education, with the mounting debt on the part of medical school graduates, further supported decisions to specialize.

    By the 1960s, it became apparent that having tied health insurance to employment left two very large groups of people without access to our increasingly expensive healthcare system: the retired and the unemployed. In 1965, with the passage of the Medicare and Medicaid Acts, these persons now had the financial resources to demand and pay for health services. This increase in numbers of potential patients, accompanied by the decision of the federal government to have Medicare and Medicaid Programs retain all the biases of employer-sponsored health insurance, contributed to the rapid escalation of health care costs as more and more people sought the services of the increasingly specialized doctors.
    More people living longer with more chronic diseases, almost all of them controlled to some extent by medicines, increases the number of prescriptions that are written each month. For example, a patient with high blood pressure and diabetes may easily use $485 worth of prescription medications each month. If you add to that blood-sugar testing materials, syringes, the need for regular medical monitoring, and periodic flare-ups that may require hospitalization, you begin to understand how the increase in the elderly population, and in the number of years that they are living, impact on healthcare costs.
    While those who are more than 65 years old represent 12 percent of the population, they consume 25 percent of all prescription medications.

    The decreasing proportion of total costs paid by the federal government, as a result of the Balanced Budget Act, continues to put pressure on the private sector.

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