October 27, 2004
Both Bush And Kerry Miss The Mark On Health Care (Post #5 of 9)
Posted by Nick Infusino

Tort Reform

President Bush is pushing for tort reform in the medical field in an attempt to reduce malpractice insurance premiums. The underlying theory is that capping the amount of punitive and compensatory damages will reduce the premiums on malpractice insurance, thereby reducing the cost of health care to patients. Also, tort reform is meant to reduce the amount of frivolous lawsuits since personal injury attorneys would be leery to bring suit on marginal cases because the limited awards may make the risks of fronting the costs of litigation less enticing.

Once you start dealing with tort reform in the medical arena you start going down a slippery slope. In theory, tort reform is great. It reduces the amount of frivolous lawsuits in this litigious happy country and it prevents greedy personal injury lawyers from collecting millions on someone else's pain. But in reality, tort reform is extremely complex with numerous arguments against it. The only argument that I will touch on in this post is that it has a strong propensity to discriminate against the poor and middle class.

By capping the amount of punitive and compensatory damages available to the injured party, tort reform skews the contingency fee calculus, turning what may be a valid claim into a marginal claim in the eyes of a personal injury attorney. (I.e. it shifts the entire calculus a few degrees towards not taking a case. For example cases that would be deemed a marginal case today would certainly not be taken, cases that would be deemed to have a fairly high degree of success would become marginal.) This will cause personal injury attorneys to only take a case on contingency when the case may yield a fairly substantial award and the case has a high probability of success. The personal injury attorney will handle all other personal injury claims on a retainer basis since the risk of litigating are greater than the potential fees. Thus, they will look to eliminate this risk by having the client pay all the costs of litigation. This system would inherently discriminate against the poor and middle class since they would only be able to find an attorney to litigate their malpractice claim on a contingency basis if the potential for damages is great enough and recovery is probable enough. Any claim that does not fit this criterion will be left unlitigated since the poor and middle class would be unable to pay the high costs associated with medical malpractice litigation.

Therefore, tort reform may reduce the costs of health care by reducing the number of lawsuits and amount of damages available but this reduction comes at a cost since poor and middle class individuals would be unable to afford litigating many legitimate claims. Therefore, tort reform would have the effect of leaving many severely injured people under-compensated and leaving many injured people wholly uncompensated. The minor reduction in health care premiums that tort reform would create is not worth the costs it would inflict on the injured poor and middle class.

In conclusion, I am not wholly against tort reform because I too think it is unjust when a personal injury attorney reaps large fees off of someone else's pain. The point of the post is just to briefly hit on the slippery slope that one goes down when considering a tort reform regime. I will touch on tort reform again in upcoming posts.

Note: I was under the failed assumption that readers of my series would have read my first post. Let me clarify this and prior posts. I am calling for the federal government to defer the health care issue to the states (as will be explored in post 9). Tort reform is a definite tool that the states could implement in a comprehensive approach to health care. Under this comprehensive approach, states will be better to handle the slippery slope problem because each state would have individualized needs and concerns (i.e. a state would be in a better position to determine sufficient caps). The point of posts 2-8 are not to entirely scrap each proposed plan, but rather to point out some of the plans flaws. This will allow me to describe why the proposals will be better implemented at the state level. Sorry about any confusion and I hope this helps.

Links to prior posts: post 1 post 2 post 3 and post 4

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