Medical Liability Reform Can Help Reduce Health Costs

February 22, 2021

Problem:

Health care costs remain one of the main concerns for small businesses in terms of providing health insurance to their employees and their families. The costs of medical malpractice––both direct and indirect––are a significant component of the health care system that is contributing toward unsustainable health care costs for many small businesses.

  • New studies have found that the average cost of medical malpractice claims in the U.S. has increased by 50 percent since 2009. Claims above $5 million now compromise a larger portion of all claims than in previous years.
  • More than a third of physicians (34 percent) have had a claim filed against them at some point in their careers.
  • Even though the rate of claims dropped in recent years, the cost to manage a legal claim has gone up significantly. The upward trend in case management expenses is striking, particularly since the time to resolve cases has decreased.
  • The rising cost of medical malpractice suits has resulted in decreased access to health care and increased health care costs. Rural areas are particularly hard hit by a lack of specialty physicians.

Solution:

Medical malpractice reforms that set limits on awards have shown to lead to increased numbers of practicing physicians.

  • Federal legislation to mitigate the costs of medical liability and defensive medicine should, at a minimum, establish a national statute of limitations on health care lawsuits, impose a cap on non-economic damages, and limit punitive damage awards.
  • Beyond traditional medical malpractice laws, lawmakers should champion legislation that establishes some kind of safe harbor for physicians, as well as the use of health courts. Any safe harbor rule would have to be in conjunction with federally-defined, evidence-based medical procedures. Physicians who abide by those standards and report outcomes, would be allowed a certain level of protection from medical liability. Health courts would allow for the establishment of specialized courts for dealing with medical malpractice claims.
  • Congress should enact much-needed medical malpractice reform in order to promote greater access to more affordable, high-quality health care.