When President Obama describes how he will contain health-care costs, he rightly talks about reducing the reams of expensive and unnecessary tests—what doctors call “defensive medicine”—that cost upward of $151 billion a year, according to an American Medical Association estimate. It’s an argument that leads logically to medical-malpractice reform, since doctors request these tests largely to protect themselves from lawsuits. But med-mal reform appears nowhere in the 1,000-plus-page HR 3200, the health-care bill currently under consideration in the House of Representatives.

Total medical tort costs, including insurance premiums, rose from $15 billion to $30 billion annually between 1997 and 2007, according to a report by the consulting firm Towers Perrin. Over the same period, the Physician Insurers Association of America says, the median medical-liability jury award tripled from $157,000 to $487,000. It’s no wonder that “Reforming Medical Malpractice” was a key section in the Obama campaign’s health-care plans. “Medical malpractice insurance rates are making it harder for doctors to practice medicine and raising the costs of health care for everyone,” the campaign’s website said.

Only a few months ago, it appeared that Obama might use medical-malpractice reform to reach out to Republicans. “There are a whole host of areas where we can work together,” said Obama in a prime-time press conference on April 29 marking his first 100 days in office. “And I’ve said this to people like Mitch McConnell. I said, look, on health care reform, you may not agree with me that we should have a public plan. . . . On the other hand, there are some areas, like reducing the costs of medical malpractice insurance, where you do agree with me.” And Senator Ron Wyden has reported that Obama raised med-mal reform in meetings with congressmen. “He’s touched on this issue at a number of meetings,” said Wyden, adding that the president articulated “the commonsense message that if doctors act in line with their own professional guidelines, that ought to create a certain presumption that they have acted reasonably.”

But something seems to have changed, to judge from the Democrats’ bills to date. Perhaps the fault lies with Senate Majority Leader Harry Reid, a lawyer given to quoting from Tom Baker’s The Medical Malpractice Myth, which argues that the problem is “too much medical malpractice, not too much litigation.” Of course, where you stand is often a matter of where you sit: lawyers donated $178.7 million to Democratic candidates in 2008—more than any other industry. Of that, $90 million went to the Obama campaign.

Congress and the president ought to consider several kinds of med-mal reform. The most obvious would be the federal application of a cap on noneconomic damages, which already exists in 35 states. Despite the opposition of many congressional Democrats, we know that this works. A June 2004 report from the Congressional Budget Office found that “state level tort reforms,” among them caps, “have decreased the number of lawsuits filed, lowered the value of claims and damage awards . . . thereby reducing general insurance premiums. Indeed premiums fell by 40 percent for some commercial policies.” Unfortunately, the president recently said that he doesn’t support federal caps, so that option appears to be off the table.

But other options can help rein in medical-malpractice abuse. Some countries place malpractice cases before judges or special commissions instead of juries. That leads to the professionalization of the process and a comparatively safe harbor for doctors, since juries often assume negligence and award plaintiffs exorbitant compensation. Such a process could lead to standardization of punishment and the faster removal of doctors who do prove to be serially negligent.

Another option has proven its effectiveness in many countries that liberal advocates of health-care reform like to use as models. Canada, England, and most of Europe have “loser-pays” rules that are designed to provide a disincentive for frivolous lawsuits. Americans file medical lawsuits 3.5 times more than Canadians do—and even though doctors are found innocent in 90 percent of the cases that go to trial, the cases cost physicians an average of $100,000 to defend. Modified loser-pays rules could tame the frivolous litigious impulse and reduce the insurance premiums that are driving doctors out of certain specialties or out of medicine entirely.

Finally, while still in the Senate, Obama cosponsored a bill with then-senator Hillary Clinton in coordination with the organization Sorry Works, which advocates a more transparent approach to disclosing medical mistakes, arguing that apologies from doctors and hospitals will reduce patients’ anger and propensity to sue. The legislation proposed federal grants to train providers in such transparency and disclosure, pointing to savings at the University of Michigan Health System, which cut lawsuits by half and reduced litigation expenses by two-thirds after adopting the proposal.

There are both principled and political reasons for Democrats to find common ground with Republicans on medical-malpractice reform. We know that the current system’s deficiencies can hurt America’s poorest citizens disproportionately. For instance, an August 2003 Government Accountability Office report found that “pregnant women in rural central Mississippi . . . travel 65 miles to locate obstetric wards to deliver because family practitioners at local hospitals faced with rising malpractice insurance premiums stopped providing obstetric services.” As for politics, Democratic strategist (and 1984 Mondale campaign manager) Bob Beckel makes the case succinctly: “Democrats offering tort reform will confound the Republicans, take away one of their most potent arguments, and put us back on the offensive. If that means throwing some trial lawyers under the bus, so be it.”

“Anyone who denies there is a crisis in medical malpractice is probably a trial lawyer.” That’s what Barack Obama said during his 1996 Illinois state senate race. Will he mention med-mal reform as part of his address to Congress tonight? Though it has been a staple of his rhetoric in the past, the gap between centrist rhetoric and centrist substance remains considerable, and the absence of such a logical piece of the puzzle from the voluminous Democratic bill indicates the strength of the trial-lawyer lobby. As the president tries to depolarize the health-care debate, it would be a shame for him to miss such an obvious opportunity for genuine bipartisan reform.

Update: Last night, the president did indeed call for medical-malpractice reform, surprising both the trial-lawyer lobby and tort-reform advocates. His specific proposal had been floated before by President George W. Bush; it is a measure to create pilot programs in different states that would put med-mal cases before special commissions rather than the court system. Skeptics may note that this is only a pilot program, but significantly, Obama announced that it would be implemented immediately under the direction of Health and Human Services Secretary Kathleen Sebelius, rather than wait to be attached to any health-care reform bill. Last night’s announcement was a small declaration of independence from a powerful special interest and a step toward bipartisan compromise. It has already drawn praise from the American Medical Association, whose board chairman, Rebecca Patchin, said, “We think this is just an excellent first step.”


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Further Reading

Up Next