Cost and Quality Problems

Defensive Medicine

Defensive medicine, which occurs when doctors order tests, procedures, or visits, to avoid high-risk patients or procedures, primarily (but not always solely) to reduce their exposure to malpractice liability, has often been blamed for making substantial contributions to health care cost growth. The direct costs associated with defensive medicine are difficult to measure. One report calculated that these direct costs accounted for 2.4 percent of annual health care spending.¹ In terms of indirect costs, malpractice premiums and legal awards contribute an estimated half a percent of our nation's health spending.² 

The AMA has reported that 34 percent of physicians have been sued and the average expense incurred on medical liability claims in 2015 was $54,165.³ Thirteen percent of medical liability premiums were higher than those for 2016. 

In an effort to curtail rising health care costs, some have pushed for tort reform, which focuses on reducing the volume and associated costs of tort litigation, often through legislation that, among other things, may resrict the legal theories that can be used to support plaintiff claims or cap damage awards (especially with respect to the awarding of non-economic and punitive damages). However, studies have found that a 10 percent decline in medical malpractice premiums would be less than 1 percent of total medical costs.⁴ Additionally, the Congressional Budget Office estimates that decreased utilization of health care services associated with tort reforms could reduce medical spending by only .3 percent. Thus, tort reform may have an insignificant effect on total health care spending. 

Notes

1. Mello, Michelle M., et al., "National Costs of the Medical Liability System," Health Affairs, Vol. 29, No. 9 (September 1, 2010). 

2. Ibid. 

3. American Medical Association, "AMA Studies Show Continued Cost Burden of Medical Liability System," (January 24, 2018). 

4. Thomas, J, William, et al., "Low Costs of Defensive Medicine, Small Savings From Tort Reform," Health Affairs, Vol. 29, No. 9 (September 2010).