Forget tort reform. The Democrats have a better diagnosis.

By Ezra KleinPosted Tuesday, July 11, 2006, at 6:20 AM ET
The Republican answer to runaway health-care spending is to cap jury awards in medical malpractice suits. For the fifth time in four years, Senate Majority Leader Bill Frist tried and failed to cap awards at $250,000 during his self-proclaimed "Health Care Week" in May. But this time, the Democrats put a better idea on the table.
Sens. Hillary Clinton and Barack Obama also want to save on health care. But rather than capping jury awards, they hope to cut the number of medical malpractice cases by reducing medical errors, as they explain in an article in the New England Journal of Medicine. In other words, to the Republicans, suits and payouts are the ill. To the Democrats, the problem is a slew of medical injuries of which the suits are a symptom. The latest evidence shows the Democrats' diagnosis to be right.
The best attempt to synthesize the academic literature on medical malpractice is Tom Baker's The Medical Malpractice Myth, published last November. Baker, a law professor at the University of Connecticut who studies insurance, argues that the hype about medical malpractice suits is "urban legend mixed with the occasional true story, supported by selective references to academic studies." After all, including legal fees, insurance costs, and payouts, the cost of the suits comes to less than one-half of 1 percent of health-care spending. If anything, there are fewer lawsuits than would be expected, and far more injuries than we usually imagine.
As proof, Baker marshals an overwhelming array of research. The most impressive and comprehensive study is by the Harvard Medical Practice released in 1990. The Harvard researchers took a huge sample of 31,000 medical records, dating from the mid-1980s, and had them evaluated by practicing doctors and nurses, the professionals most likely to be sympathetic to the demands of the doctor's office and operating room. The records went through multiple rounds of evaluation, and a finding of negligence was made only if two doctors, working independently, separately reached that conclusion. Even with this conservative methodology, the study found that doctors were injuring one out of every 25 patients—and that only 4 percent of these injured patients sued.
The Harvard study stands for a large body of literature. On their own, however, the results don't disprove the Republicans' thesis that many medical malpractice suits are frivolous. Maybe badly injured patients don't sue, while the reflexively litigious clog up the legal system, making tort reform a viable solution. But a new study, released in May, demolishes that possibility. Dr. David Studdert led a team of eight researchers from Harvard Medical School and Brigham Young University who examined 1,452 medical malpractice lawsuits. They found that more than 90 percent of the claims showed evidence of medical injury, which means they weren't frivolous. In 60 percent of these cases, the injury resulted from physician wrongdoing. In a quarter of the claims, the patient died.
When baseless medical malpractice suits were brought, the study further found, the courts efficiently threw them out. Only 150 of the cases in which the researchers couldn't detect injury received even token compensation. Indeed, a bigger problem was that 256 cases were thrown out of court despite evidence of harm to patients by physicians. The other 1,046 cases, in the research team's opinion, were decided correctly, with damage awards going to the injured and dismissal foiling the frivolous suits.
Nor is there evidence to show that the level of jury awards has shot up. A recent RAND study looked at the growth in malpractice awards between 1960 and 1999. "Our results are striking," the research team concluded. "Not only do we show that real average awards have grown by less than real income over the 40 years in our sample, we also find that essentially all of this growth can be explained by changes in observable case characteristics and claimed economic losses."
Which brings us back to the Republicans' and Democrats' divergent approaches. The Obama-Clinton legislation fits well with Studdert's and RAND's findings. It also builds on successful efforts by the nation's anesthesiologists and a few hospitals to reduce their medical malpractice payouts.
Anesthesiologists used to get hit with the most malpractice lawsuits and some of the highest insurance premiums. Then in the late 1980s, the American Society of Anesthesiologists launched a project to analyze every claim ever brought against its members and develop new ways to reduce medical error. By 2002, the specialty had one of the highest safety ratings in the profession, and its average insurance premium plummeted to its 1985 level, bucking nationwide trends. Similarly, feeling embattled by a high rate of malpractice claims, the University of Michigan Medical System in 2002 analyzed all adverse claims and used the data to restructure procedures to guard against error. Since instituting the program, the number of suits has dropped by half, and the university's annual spending on malpractice litigation is down two-thirds. And at the Lexington, Ky., Veterans Affairs Medical Center, a program of early disclosure and settlement of malpractice claims lowered average settlement costs to $15,000, compared with $83,000 for other VA hospitals.
Clinton and Obama would offer federal grants and support to unroll such programs nationwide. And they want to create a national database to track incidents of malpractice and fund research into standards, procedures, and technologies that would prevent future injuries. So, what say you, Bill Frist? It is time for another Health Care Week?