CBO: Legal reforms would save taxpayers billions in health care costs

By Chris Rizo | Oct 10, 2009

Orrin Hatch (R)

WASHINGTON (Legal Newsline)-As much as $54 billion could be saved over the next 10 years if Congress enacts limits on medical malpractice lawsuits, a congressional report says.

The nonpartisan Congressional Budget Office said Friday that legal reforms would lower medical malpractice premiums for physicians and other health care professionals as well as save money because doctors would feel more comfortable with their medical decisions without running otherwise unnecessary tests and procedures -- so-called defensive medicine.

Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, made the announcement in a letter to U.S. Sen. Orrin Hatch, R-Utah.

Legal reforms, including a $250,000 cap on damages for pain and suffering and a $500,000 cap on punitive damages and restricting the statute of limitations on malpractice claims would reduce total national health care spending by about 0.5 percent, Elmendorf said.

He was responding to questions raised by some members of the Senate Finance Committee, including Hatch. The savings the CBO outlines are nearly ten times greater than CBO estimated last year.

"I think this response from the CBO confirms that there is a growing problem regarding the costs of health care lawsuits," Hatch said in a statement. "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."

Still, the nation's trial lawyer lobby downplayed the potential savings from enacting legal reforms as a part of President Barack Obama's push for an overhaul of the nation's health care system.

The American Association for Justice, formerly known as the Association of Trial Lawyers of America, said in a statement that the "vast majority of empirical evidence suggests that there are only minuscule savings to be found in reforming our nation's civil justice system."

For his part, Obama last month called for a program to provide federal grants to states to develop pilot programs aimed at limiting medical malpractice lawsuits.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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