ROBERT SIEGEL, host:
How much of the U.S. health care tab can be traced to our system of malpractice suits? How much could be saved by capping liability in those suits? Advocates of doing that say we would save what doctors pay in premiums and pass along to their patients, and we would save on the cost of tests and prescriptions that are ordered in the practice of defensive medicine. We've reported on this program that all of that comes to just about one percent of health care costs. In an op-ed page article in the Sunday New York Times, former New Jersey Senator Bill Bradley wrote this: An estimated 10 cents of every health care dollar paid by individuals and companies goes for litigation and defensive medicine. Ten percent - that's a pretty big spread. So we've called on Anne Underwood who's written about this for the New York Times blog, Prescriptions.
And Anne Underwood, does 10 percent sound right to you or too high?
Ms. ANNE UNDERWOOD (Contributor, The New York Times): From everything I have heard, 10 percent is too high, although it is a figure that is out there and circulating and seems to refuse to die. But the actuarial consulting firm, Towers Perrin, calculated in its 2008 report, that was using 2007 data, that tort costs, which include both payments for medical malpractice insurance and trial costs, totaled 30.4 billion. Now, out of the $2 trillion health care system, it's somewhere around one to 1.5 percent of the total. It certainly is not 10 percent.
SIEGEL: And 1.5 percent is a figure that the Congressional Budget Office, the CBO, I gather, came to as well.
Ms. UNDERWOOD: Correct. Then there's the issue of defensive medicine, which you raise. And this is a very difficult issue to put any sort of number on. It makes intuitive sense that we've certainly all been hearing that a major portion of costs and health care are due to the fact that doctors are ordering a lot of expensive tests that often aren't needed. And part of that reason, one could assume, could be fear of lawsuits. But part of it may also be fee schedules. Doctors get reimbursed for expensive tests.
And probably, the most important factor is that doctors tend to do what other doctors in their area are doing. There is a standard of care that they follow. And if that says you order these tests, then they order these tests. So it's very hard to tease out how much of that behavior might be due to defensive medicine.
SIEGEL: I went to the FactCheck.org Web site, and they attribute some of the higher estimates to a paper by two Stanford academics. One of whom, Mark McClellan, who went on to serve very prominently in the Bush White House and at the FDA. And they wrote that malpractice reforms could lead to reductions of five to nine percent in medical expenditures. It was a lot of going back over their numbers and disputing them, but that seemed to be one source of the higher, the highest.
Ms. UNDERWOOD: Yeah, that is true. That was a 1996 study. It was by Stanford economist Daniel Kessler, as well as Mark McClellan. And what they found actually, using 1980s data, was that five to 7 percent of costs were attributable to that malpractice system that existed at the time. But then when they went back a number of years later, they published another study in 2002, and that's when they came up with that 2.5 to 3.5 percent figure. And they said that the costs had gone down because of…
Ms. UNDERWOOD: …HMO was - because of managed care.
SIEGEL: Is it troubling to people following this debate that the estimates of this element of our health care costs range so far?
Ms. UNDERWOOD: It certainly is. And - but this is an argument that just won't go away, in part because it makes so much intuitive sense to people because we've all heard about frivolous lawsuits and we've all heard about outrageous jury awards. But the problem is that when it comes to medical malpractice, it's a very small portion of total health care costs. It certainly is part of the cost. There is no doubt about that. But according to the people I've spoken with who study this issue, it certainly not driving the cost.
SIEGEL: Anne Underwood, thanks a lot for talking with us.
Ms. UNDERWOOD: Thank you so much for having me today.
SIEGEL: That's Anne Underwood, who is a contributor to The New York Times' online blog Prescriptions.
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