AMERICAN CONSERVATISM IN 2008 AND BEYOND

Are malpractice costs considered to be part of health costs?

We're looking at the total cost of litigations vs total health care costs; it's minimal - unless you can prove otherwise.

From Jury Verdict Research:

Quote:

Jury Verdict Research® Releases Verdict Survey:
-Medical-Malpractice Jury-Award Median Up Slightly
- Overall Median Compensatory Award Down 30%

HORSHAM, Pa. - Jury awards for medical-malpractice claims rose fractionally, while awards for all personal-injury liabilities fell significantly, according to Jury Verdict Research's report, Current Award Trends in Personal Injury - 43rd Edition.

After steadily climbing more than 100% from 1996 to 2000, the compensatory jury-award median for medical-malpractice cases has leveled off the last three years studied. The percentage of $1 million or more medical-malpractice verdicts remained the same from 1999 through 2002 at 52%.

No, the question was does the cost of litigation contribute to high health care costs. The answer is yes.

No, the question was does the cost of litigation contribute to high health care costs. The answer is yes.

Rising doctors' premiums not due to lawsuit awards

Study suggests insurers raise rates to make up for investment declines

By Liz Kowalczyk, Globe Staff | June 1, 2005

Re-igniting the medical malpractice overhaul debate, a new study by Dartmouth College researchers suggests that huge jury awards and financial settlements for injured patients have not caused the explosive increase in doctors' insurance premiums.

The researchers said a more likely explanation for the escalation is that malpractice insurance companies have raised doctors' premiums to compensate for falling investment returns.

The Dartmouth economists studied actual payments made to patients between 1991 and 2003, the results of which were published yesterday in the journal Health Affairs. Some previous studies have examined jury awards, which often are reduced after trial to comply with doctors' insurance coverage maximums or because the plaintiff settles for less money to avoid an appeal. Researchers found that payments grew an average of 4 percent annually during the years covered by the study, or 52 percent overall since 1991, but only 1.6 percent a year since 2000. The increases are roughly equivalent to the overall rise in healthcare costs, said Amitabh Chandra, lead author and an assistant professor of economics at the New Hampshire college…

Meanwhile, malpractice insurance premiums for internists, general surgeons, and obstetricians have skyrocketed since 2000, jumping 20 to 25 percent in 2002 alone…

''It's not payments that's causing this," Chandra said. ''The simple explanation that comes to mind is the underwriting cycle. If they're making less money from the investment side of things, it's going to cause [insurance companies] to raise rates."

The study's conclusions are sure to generate praise from some malpractice lawyers and outrage from many doctors and insurance company executives, who argue that jury awards are out of control and the solution is a cap on noneconomic damages for plaintiffs, commonly referred to as ''pain and suffering" awards.

The American Medical Association, a national organization based in Chicago that represents doctors, and the Physician Insurers Association of America, a coalition of malpractice insurers based in Maryland, are lobbying for a nationwide $250,000 cap, and President Bush has made a cap on noneconomic damages a key component of his malpractice reform proposal…

I can't imagine what accounting system you would use there that would allow it to be separated from the cost of doing business. But then maybe your doctors don't get sued if they deliver less than a 100% perfect baby or if they omit a test that is not warranted by the symptoms but which in the end might have remotely possibly made a difference.

Our doctors here are sued for that sort of thing all the time. Which is why tort reform will be necessary here to get healthcare costs under control.

Then again, maybe Germany is so fortunate that the big bulk of your elected leaders are not former trial lawyers. Which, of course, is why there has been no meaningful tort reform to address this situation regarding healthcare costs.

11 May 2006
Harvard's Medical Malpractice Case Study
The Harvard School of Public Health did a study of medical malpractice cases published in Thursday's New England Journal of Medicine (abstract here).

Many of the lawsuits analyzed contained no evidence that a medical error was committed or that the patient suffered any injury, the researchers reported. . . .

[T]he Harvard researchers reviewed 1,452 malpractice claims randomly selected from five insurance companies. The cases were resolved -- meaning they ended in a verdict, a settlement or a dismissal -- between 1984 and 2004.

The claims resulted in a combined $449 million in verdicts and settlements.

The researchers examined medical records, depositions and court transcripts to determine if the patients were injured and whether the injury was due to a medical error.



It found that 97 per cent involved a severe disability or death, while 3% involved no verifiable medical injury. Note that some medical malpractice cases, those involving indignity to the patient causing only emotional harm (such as circulating embarassing photos of a person secured in violation of medical ethics around a medical office, for example), would probably not count as a verifiable medical injury for purposes of the study, nor would some cases where pain associated with a soft tissue injury was the only reported harm.

Only 6 cases in the sample were found by the researchers to involve no verifiable medical injury, and yet still resulted in some compensation to the patient (84% were dismissed without any compensation payment), and some of those payments could have been token payments only.

It found that 27% were dismissed without any judgment or settlement payment to the defendant in cases that the researchers felt lacked merit, that 10% resulted in a judgment or settlement payment in a case that the researchers felt lacked merit, that 46% involved medical mistakes causing injuries and were settled or resulted in judgments, and that 17% of cases were found to involve medical mistakes causing injuries and were dismissed.

Thus, the current system is roughly accurate only, and appears to be biased against patients as it dismisses meritorious cases more often than it pays cases where the researches found no evidence of a medical mistake or no injury.

Some of the cases the study viewed as not involving medical mistakes, however, cast doubt on the methodology used by the researchers. For example:

In one instance, a young woman with no family history of breast cancer underwent routine breast exams for four years and came back with a clean bill of health.

But doctors later found she had breast cancer that had spread to other parts of the body.

The researchers determined the case did not involve medical error because proper procedures were followed. The woman filed a malpractice claim and received an undisclosed settlement.



In a case like that one, of course, there is not going to be any documentation that one or more of the breast exams was conducted improperly, but it is nevertheless reasonable, indeed likely, that in fact, one or more of the exams was improperly conducted because it would be unlikely for breast cancer to reach such an advanced state in the course of one year. An absence of direct evidence does not always, or even often, mean that a mistake was not made by the medical professionals involved. Indeed, in any failure to diagnose case, the absence of documentary or testimonial evidence of a mistake can itself be damning. Fault is a slippery thing.

One suspects that procedural mistakes by the patient's counsel and failures to meet the statute of limitations requirements would be common causes for dismissals of meritorious claims, although jury decisions are also relevant.

Medical malpractice attorneys are not dumb, and medical doctors are less likely to settle cases where they don't feel that they have done something wrong than any other kind of defendant in my experience, in part, because the settlements can't be truly confidential due to regulatory requirements. The study states that the average settlement in cases where there was no identified medical mistake was $313,000, and in truth, smart doctors and attorneys don't pay that kind of money in truly groundless and frivilous cases. Cases found by researchers to involve both injuries and mistakes resulted in larger payments (an average of $521,560), however, which indicates that close cases require both sides to recognize that they are not slam dunk cases.

With regard to administrative costs the study found that:

For every dollar spent on compensation, 54 cents went to administrative expenses (including those involving lawyers, experts, and courts). Claims involving errors accounted for 78 percent of total administrative costs.

If they look at all of the facts - the average malpractice verdict has substantially risen in the past seven years,

Well I assume that CI's (again unlinked) article is an attempt to back down on his earlier assertion that malpractice is not one of the driving forces pushing healthcare costs through the roof here.

No chart in isolation from other info has any relevance. Guess why?

The best idea I've seen anybody come up with via healthcare reform was the idea of medical savings accounts and everybody paying the first $2000 of their annual medical costs themselves before insurance kicked in. That $2000 would be tax free whether or not it was needed for medical costs and, if it was intentionally set aside in a savings account, if it was not needed, it could then be used any way the person wanted at the end of a 12-month period. You can be sure that everybody would be looking at the charges and questioning the unnecessary test or the $100 aspirin if they were fronting the money themselves and it would also encourage more savings.

It would need to be accompanied by tort reform so doctors could again exercise professional judgment and would not have to order unnecessary tests or perform unnecessary procedures in order to protect themselves from malpractice suits.

March 28, 2009
Davos Capitalism: Adam Smith's Nightmare
by Michael Miller

In The Wealth of Nations, Adam Smith warned, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." The shenanigans of business leaders over the last year, which led to a serious loss of faith in markets and a call for more government intervention, sadly proves Smith's point. Unfortunately, the problem runs deeper than Fannie Mae, Freddie Mac, Merrill Lynch, AIG or whatever company has grabbed the headlines of the day.

Smith, who published his landmark work in 1776, warned of corporate collusion, but we're experiencing something much more insidious -- not just businesses, but business and government and a host of others all meeting, and colluding, at the posh Swiss resort town of Davos. It is Adam Smith's nightmare.

This isn't free market capitalism. It's Davos capitalism, a managerial capitalism run by an enlightened elite--politicians, business leaders, technology gurus, bureaucrats, academics, and celebrities--all gathered together trying to make the economic world smarter or more humane. It might even be, as Bill Gates famously said last year at Davos, a more "creative" capitalism.

The late Samuel Huntington coined the term Davos Man -- a soulless man, technocratic, nation-less, and cultureless, severed from reality. The modern economics that undergirded Davos capitalism is equally soulless, a managerial capitalism that reduces economics to mathematics and separates it from human action and human creativity.

And we looked up to Davos Man. Who wouldn't be impressed by the gatherings at the annual meeting of the World Economic Forum at Davos, a Swiss ski resort? Sharply dressed, eloquent, rich, famous, Republican, Democrat, Tory, Labour, Conservative, Socialist, highly connected, powerful and ever so bright.

Then, when the whole managerial economy collapsed, the managers and technocrats lost faith in markets. But they did not lose faith in themselves, and now they want us to entrust even more of the economy to them.

If they get away with it, they'll have a fundamental confusion to thank: Davos capitalism has become equated with free markets. While this is a thoroughly bi-partisan affair with roots stretching back many decades, much of the current confusion stems from the work of the New Democrats and New Labour of the early 1990s. The Soviet Union had collapsed and Keynesian economies in Europe and the United States had failed. It was politically unacceptable to use the language of centralized planning, so astute politicians like Bill Clinton and Tony Blair used market-friendly language. They spoke about a smarter capitalism, managed globalization, the government working with business, and public/private partnerships. They used market language while pursuing managerial capitalism.

It was a beautiful bait and switch, a political masterstroke, and many free marketers went along for the ride. Consequently, in the minds of many, economic freedom has failed. Indeed, it has not. The crucial first step to recovery is to describe the problem aright.

The allure of Davos Capitalism is understandable: bright people solving our problems, ending global poverty and the vicissitudes of the free market. It's the dream, in T.S. Eliot's words, "of systems so perfect that no one will need to be good." No such system exists. Morality is indispensible. Nor would it have worked even if the men and women gathering at Davos truly had been our best and brightest, for no group is good or smart or prophetic enough to manage centrally the billions of opportunities and choices that comprise the market.

(Foxfyre's comment: Referring again to Walter Williams essay on how a free economy works and how government interference with anything can affect the whole.)

We tend to think of a market as an inanimate force and economics as akin to alchemy, where only a few brilliant insiders know what is going on. But markets are not inanimate; they are relationships between people, and the technocratic schemes of Greenspan and Paulson and Geitner and Bernanke and the Clinton-Bush-Obama administrations' attempt to manage the economy has made it clear that the managers know little more than we do.

We have tried the illusory third way -- it is called Davos -- and it has failed.
There was an alternative, but it wasn't tried. Had markets been allowed to operate freely, they would have reacted to and reflected reality; instead, government policy shielded companies and individuals from the consequences of our actions, and in so doing perpetuated an adolescent, me-first society.

The goal of economic liberty is not a society of producers and consumers in equilibrium. Economic liberty is important because it creates space for people to live out their freedom, take care of their families, and fulfill their responsibilities. Economic freedom is necessary because it allows people to take risks and create material prosperity for a flourishing life. Economic liberty is needed because without it there can be no political liberty. Both require individual virtue and a moral culture for sustenance. Neither an adolescent culture following its whims, nor a soulless culture severed from its historical roots, from the sacrifices and struggles of our fathers whose spirit and dedication to freedom made it possible, is adequate.

Lord Acton wrote, "Liberty is the delicate fruit of a mature civilization." We must begin anew the work of rebuilding the moral culture -- one committed to truth, responsibility and a spiritual depth that the Davos Man cannot provide. Our liberty depends on it.

Michael Miller is the Director of Programs at the Acton Institute

http://www.realclearpolitics.com/articles/2009/03/davos_capitalism_adam_smiths_n.html

http://www.heritage.org/Research/Welfare/bg1796.cfm
September 15, 2004
Understanding Poverty and Economic Inequality in the United States
by Robert Rector
...
On August 26, the U.S. Census Bureau released annual poverty figures showing that the percentage of persons who are poor rose from 12.1 percent in 2002 to 12.5 percent in 2003.
...
The last recession officially ended--and overall economic growth resumed--in November 2001, but the poverty rate continued to rise in the two subsequent years: 2003 and 2004. This cycle follows the normal economic pattern that has occurred in most prior recessions.
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In 2003, the census reported that the top fifth of households had 49.8 percent of the total income, while the bottom fifth had only 3.4 percent. Thus, the top quintile appeared to have $14.60 in income for every $1.00 in the bottom quintile.4

These figures are misleading for three reasons. First, they ignore taxes. Second, they ignore nearly all of the $750 billion in social safety net benefits received by low-income and elderly persons. Third, the census' fifths or quintiles do not contain equal numbers of persons. The top quintile actually has 70 percent more people than the bottom quintile.5 If taxes and safety net benefits are taken into account and the quintiles are adjusted so that each contains one-fifth of the population, the apparent gap between the top and the bottom quintiles shrinks dramatically--the ratio of the income of the top quintile to that of the bottom quintile falls from $14.60 to $1.00 down to $4.21 to $1.00.6

...
The following facts about persons defined as "poor" by the Census Bureau are taken from various government reports:

Forty-six percent of all poor households own their own homes. The average home owned by persons classified as "poor" by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.
Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.
Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.)
Nearly three-quarters of poor households own a car; 30 percent own two or more cars.
Ninety-seven percent of poor households have a color television. Over half own two or more color televisions.
Seventy-eight percent of America's poor own a VCR or DVD player; 62 percent have cable or satellite TV reception.
Seventy-three percent of America's poor own microwave ovens; more than half have a stereo; and one-third have an automatic dishwasher.
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