CBO Review of Tort Reform Says It Would Save Health Care Costs

By October 9, 2009Briefly Legal

In a letter to Senator Orrin Hatch (R-UT), the Congressional Budget Office reports that tort reform could save about $11 billion in national health care costs in 2009, or about 0.5 percent of national health care spending.

This letter responds to your request for an updated analysis of the effects of proposals to limit costs related to medical malpractice (“tort reform”). Tort reform could affect costs for health care both directly and indirectly: directly, by lowering premiums for medical liability insurance; and indirectly, by reducing the use of diagnostic tests and other health care services when providers recommend those services principally to reduce their potential exposure to lawsuits. Because of mixed evidence about whether tort reform affects the utilization of health care services, past analyses by the Congressional Budget Office (CBO) have focused on the impact of tort reform on premiums for malpractice insurance. However, more recent research has provided additional evidence to suggest that lowering the cost of medical malpractice tends to reduce the use of health care services. CBO has updated its estimate of the budgetary effects of proposals for tort reform to reflect that new information.

Sen. Hatch issued a statement, “Tort Reform Key to Affordable Healthcare“: ““I think this response from the CBO confirms that there is a growing problem regarding the costs of health care lawsuits. In years past, the CBO mainly focused on the cost doctors’ malpractice insurance premiums and did not adequately address the tendency of doctors to use ‘defensive medicine,’ which does little to promote patient health and serves only to help doctors avoid being sued.”

Join the discussion 2 Comments

  • Kevin Keane says:

    The comment from Michael Kirsch does not seem to make much sense. As long as the doctor exercises good judgment, he’s obviously safe from lawsuits. There is no need to ever order a “medically unnecessary” test because if it really is medically unnecessary, the patient cannot get sick and thus will never file a lawsuit. On the other hand, if a patient does get sick because the doctor failed to perform a test, then the test wasn’t so unnecessary in the first place. I’d rather have a system that enforces good judgment instead of letting a doctor off the hook for cutting corners. Also keep in mind that diagnostic tests are generally cheap compared with treatment, even CAT scans or colonoscopies. That’s why we emphasize early diagnosis of diseases.

  • Michael Kirsch, M.D says:

    I’ll bet that tort reform would save a lot more that .5% of health care costs. How do you determine if a medical test or CAT scan is done for defensive purposes or because it is medically needed? I think this is impossible. Even the ordering physicians may struggle with this question on the test that they order themselves on their patients. Beyond the cost savings, tort reform would bring fairness to an unfair arena. See http://www.MDWhistleblower.blogspot.com under Legal Quality category.

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