The Old Bait-and-Switch

September 4th, 2011 at 2:31 pm

My previous post argued that since they’re never going to be satisfied, you might as well not try to score political points by adopting business’s anti-regulatory agenda.

Here’s an interesting research report cited in this NYT piece showing how adapting another big, pro-business R idea—one some D’s have also been leaning towards of late—won’t help either.

Medical tort reform—limiting damages in medical malpractice cases—has consistently been touted by conservatives as the best way to reduce the increase in health care costs.  It’s their surefire alternative to the Affordable Care Act.

Well, according to this study, that didn’t work in Texas, where a certain governor pushed through “…a comprehensive package of tort reforms in 2003, including a fairly strict cap on non-economic damages.”

It’s rare to have natural experiments like this in economics—other states without these “reforms” serve as the control group—so these findings are worth taking seriously:

“Post-reform, we find no evidence of reduced Medicare spending in Texas relative to these comparison groups. We then compare health care spending in Texas hospital service areas (HSAs) with high med-mal pressure to Texas HSAs with low med-mal pressure. Pre-reform, we find no evidence that Medicare spending was higher in high-pressure HSAs than low-pressure HSAs, and no evidence that spending grew faster in high-pressure HSAs. Post-reform we find no evidence that high-pressure HSAs experienced any change in spending trends, relative to low-pressure HSAs.   In sum, we find no evidence that Texas’ 2003 tort reforms ‘bent the cost curve.’”

That doesn’t mean the tort system is perfectly calibrated, but it’s another example of the dominant conservative bait-and-switch strategy: frame your reform as furthering an economic goal—jobs and incomes (supply-side tax cuts, close the EPA); slow the growth of health costs (tort reform)—when the real goal is providing a goodie to a constituent.


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3 comments in reply to "The Old Bait-and-Switch"

  1. Patrick (G) says:

    When the real goal…call it what it is…is embezzlement of public funds for the benefit of their patrons.

  2. Geoffrey Freedman says:

    The cost of legal expenses for medical insurance in the industry are generally limited to no more than 2% of the total costs, statistically.

    The real problem is that the threat of a law suit causes medical care providers to be less than forthcoming when problems do exist. The only way around this is the legal process of discovery, which is expensive and requires you to file a lawsuit in the first place.

    There are several organizations that have tried honesty (includiing John Hopkins) in dealing with families when there are malpractice issues. They talk to the families and offer realistic and reasonable settlements. Statistics support lower legal expenses and greater trust with the general public for these organizations.

    In Texas, the tort reform laws did not require that insurers lower their premiums, and they did not until the doctors complained to the Texas government. When the premiums were lowered, although they were adjusted significantly, the premium adjustment was not commensurate with the expense deduction, so insurance companies in Texas actually make more money from their liability insurance than they did prior to tort reform.

    In addition, Texas health care costs are now rising more rapidly than the national average. After tort reform, Texas did have an influx of Doctors. In a fee for services system, if more health care services are available, medical expenses would increase statistically on a per capita basis. The point is that there was no lower health care costs due to tort reform.

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