GOP Proposes New Bill to Cut Medical Malpractice Claims

The House of Representatives GOP introduced a “medical malpractice reform bill,” H.R. 1215, that would cap the total amount of non-economic damages to $250,000. Medical malpractice reform is frequently cited as the key to reducing medical costs. However, reformists overblow the impact of malpractice litigation, minimize the good it does for society, and fail to address the underlying problems responsible for increasing medical costs.

Medical Malpractice: Societal Benefits

Medical malpractice fulfills a crucial role in society. Hospitals and doctors are opaque industries. Patients are forced to rely on a handful of choices based on geographic location, in effect, a regional monopoly. Additionally, patients head to doctors and hospitals because they don’t understand medical issues and, unlike other complicated industries, they don’t have an opportunity to price compare or shop around for the best option.

These constraints on the “free market” of healthcare mean that doctors and hospitals are not under the same pressures as other businesses to provide exemplary service. Malpractice fulfills the role of holding doctors and hospitals accountable for their actions.

Risks of Reform

“Reform” efforts such as the one proposed by the House GOP severely constrains a number of compensation people can receive. For example, a surgeon mistakenly removed the healthy testicle from a patient earlier this year, leaving the painful atrophied one in place. The patient is now faced with the Hobbesian Choice of keeping his remaining testicle and endure the pain or remove it and be forced to rely on testosterone injections to balance his hormones. He was awarded $620,000 for pain and suffering (non-economic damages) in addition to his medical costs.

Reform would have capped his pain and suffering to $250,000. The problem is that all errors, no matter how egregious, will all be capped at $250,000 in damages. Doctors and insurance companies are then under less incentive to provide adequate care or correct past mistakes. Moreover, the caps save insurance companies money, not patients. Doctors who make these mistakes should be discouraged from making future mistakes, which saves patients in the long-run (although it is hard to measure and therefore an easy target for the GOP reform efforts).

Additionally, the cap increases the risk on attorneys, discouraging them from accepting clients whose claims are not 100 percent fool-proof. Therefore, many people who may have legitimate claims are unable to find lawyers willing to represent them because the risk is too high for these low judgments.