The price of defensive medicine

New Study Compares Tort Systems — Reform Improves Health Care for Patients

A new study by the Pacific Research Institute, US Tort Liability Index: 2008 Report, measures the best and worst tort systems in America. In the report, the authors examine evidence provided by top economists and legal scholars on the benefits of tort reform in peoples’ lives and conclude that, among other things, reform improves health care and health care access. The report also discusses the cost of defensive medicine – most of which is prompted by medical liability concerns – which has now reached the astounding total of $163 billion a year. This is the sum of the direct costs of defensive medicine, estimated to be $124 billion a year by PriceWaterhouse Coopers, and PRI’s own estimate of the $39 billion indirect costs from lost productivity due to reduced access to health care attributable to defensive medicine. According to PRI, increased health-care costs brought on by defensive medicine have also added some 3.4 million Americans to the rolls of the uninsured.

I used to work in Indiana, which has one of the more doctor friendly malpractice systems. Potential lawsuits are brought before a panel for an opinion prior to a lawsuit being filed. Indiana also has a cap, or limit, on how much money a plaintiff can win for pain and suffering. All this led to low malpractice insurance costs. In New Jersey it is quite different.

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