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Could Health Reform Exacerbate the Litigation Crisis?

February 17, 2010
4:39 pm

One of the oft-cited goals of health reform is to ‘bend the cost curve’ on health spending.  On that point, a recent op-ed in the Wall Street Journal raises questions over whether the current House and Senate bills could actually exacerbate costs as a result of new health-related litigation.

Where might these lawsuits arise?  Writing in the Journal, Curt Levey, the executive director of the Committee for Justice, points toward the legislation’s creation of “new federally enforceable rights and obligations, layers of complex federal regulations, and dozens of new programs and agencies — not to mention 50 brand-new health ‘exchanges’.”  Legal action would contest everything from questions of constitutionality to procedural disputes to individual coverage challenges to contests of bureaucratic decisions implementing the legislation.

Levey emphasizes that “there’s enough vague and ambiguous statutory language to keep lawyers employed for decades.”   For instance, some provisions that call for HHS’s broad rule-making could end up being litigated “as an improper delegation of congressional authority.”  But the number of lawsuits would especially mount from individuals’ case-by-case disputes.  People would exercise their “new-found right to essential health benefits.”  Legally challenging limitless, routine coverage decisions could well spring forth in droves.

Policymakers should take a closer look at the prospective litigation explosion that could come from health reform legislation.  The last thing we need to do is worsen the “culture of blame” in the health system.  This adversarial culture already hinders patient safety gains and quality improvement.  But pending legislation could well cause healthcare to “become even more costly and adversarial, with patients’ concerns crowded out as doctors focus on avoiding lawsuits and federal investigations, and insurance companies and regulators blame each other for every problem,” Levey writes.

Unfortunately, the health bills the Senate and House have passed omit legal reforms that would actually lower health costs.  States like California and Texas have adopted caps on noneconomic, or “pain and suffering,” damages in medical liability cases.  Those caps have helped hold down providers’ liability insurance costs and given a level of predictability in the legal system.  And they haven’t deprived wrongfully injured patients from being made whole when there’s a legitimate claim.  The Congressional Budget Office has estimated that this sort of liability reform would actually lead to health cost savings of $54 billion.  Some have judged CBO’s savings estimate to be on the conservative side.

One Response to “Could Health Reform Exacerbate the Litigation Crisis?”

  1. Gary Kaplan Says:

    The claim that healthcare reform should be opposed, because it will increase wasteful litigation is like saying that hospitals should be closed to save electricity. There is no doubt that litigation is far too wasteful and needs reform (in healthcare and all other fields). A speculative risk of incremental lawsuits is a pretty thin reed on which to base efforts to address exploding medical and insurance costs (96-98 percent of which have nothing to do with litigation) and provide coverage to at least some part of the now more than 50 million uninsured Americans. Last week, we learned that healthcare now accounts for 17.3 percent of the GDP, and more than half of healthcare costs will soon be paid by government programs. For example, Mr. Levey expresses concern about the cost of “court battles [that] will focus on the constitutionality of requiring individuals to buy health insurance.” The cost of an incremental lawsuits from reform would not even rise to the level of insignificant in comparison to such costs. Meanwhile, one of the nation’s largest healthcare insurers want to increase some rates from 30 to 39 percent, which will doubtless force more of its subscribers to drop coverage (and lead to still higher rates for those that can afford to continue). At this rate, we will eventually end up with a near single-payor healthcare system–even in the absence of reform–but one that is incapable of meeting increased demands of an ever-more impoverished public.”

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