Wednesday, October 14, 2009

Cato's assumptions: Tort Reform and reading back through the links

As a researcher I love how the internet works, and how fast factoids become facts.

Case in point: Cato's latest diatribe at Delmarva Dealings:

Tort Reform Will Save $54 Billion

Why won’t the Democrats even discuss it?

Obviously they won’t discuss tort reform because trial lawyers rank up there with hedge fund socialists, Hollywood, and Big Labor as primary funders of the coming “People’s Revolution”. That said, when the Congressional Budget Office (CBO) admits that tort reform would save Americans $54 BILLION over the next decade, it’s something that should be discussed … IF Democrats were interested in health care REFORM.

Unfortunately, the party of Obama is not interested in REFORM. They are interested in a TAKEOVER.


Clicking through the only link in the story, we reach this WaPo story that, curiously does not contain a link to the CBO report it cites:

Congressional budget analysts said Friday that lawmakers could save as much as $54 billion over the next decade by imposing an array of new limits on medical malpractice lawsuits -- 10 times more than previously estimated.

New research shows that legal reforms would not only lower malpractice insurance premiums for medical providers, but also would spur providers to save money by ordering fewer tests and procedures aimed primarily at defending their decisions in court, Douglas W. Elmendorf, director of the nonpartisan Congressional Budget Office, wrote in a letter to Sen. Orrin G. Hatch (R-Utah).

The CBO report lends credence to Republican arguments that substantive limits on malpractice lawsuits will reduce health-care costs.


Curious, I finally sought out the CBO letter to Senator Hatch, which can be found here.

The letter is not a formal research report, but a rather muddled hodge-podge of collected data, references to some recent studies without dealing with the major research in the field, and reaches its fiscal conclusions only after jumping through a great number of hoops.

For example, of the $54 billion dollars in savings over 10 years, $13 billion is not a savings in health care expenditures, but an estimate of how much additional tax revenue that the government would bring in because people are paying lower medical bills. In other words, it is a derivative projection: IF tort reform reduces expenditures like we think it might, THEN we might make this much more in taxes.... Yeah, that's solid.

The letter also indicates that these estimates may not work for large insurance pools, because managed care procedures have apparently already reduced those costs:

In research reported in 2002, Kessler and McClellan found that when tort reform was introduced, health care spending in regions with relatively more enrollees in managed care plans did not fall as much as it did in regions with relatively fewer enrollees. Presumably, the managed care plans had already eliminated some of the defensive medicine that would otherwise have been diminished by tort reform.


The letter also admits that the CBO has no idea exactly what the proposed caps on punitive damages [$250K] and pain-and-suffering damages [$500K] will do to the quality of health care:

There is less evidence about the effects of tort reform on people’s health, however, than about its effects on health care spending— because many studies of malpractice costs do not examine health outcomes. Some recent research has found that tort reform may adversely affect such outcomes, but other studies have concluded otherwise.


The report then admits that such changes are projected by some studies to result in a small but measurable increase in patient mortality.

In point of fact, as the letter indicates in referencing an earlier government report on tort reform, neither the CBO nor the GAO [which produced the foundational report] was actually ever tasked to examine the impact of tort reform on health care outcomes:

The report does not examine, nor claim to examine, whether such suits were in fact justified by poor quality or negligent care. Nor does the report discuss a consequence of higher malpractice insurance rates being a factor in defensive medicine.


More to the point, the entire CBO letter fails to deal with Tom Baker's research on tort reform and health care outcomes, which is considered state-of-the-profession in the law profession. I have cited Baker at length before [it's five paragraphs long and worth the two minutes it will take to read it], but here is the gist of his conclusion:

The real problem is too much medical malpractice, not too much litigation. Most people do not sue, which means that victims—not doctors, hospitals, or liability insurance companies—bear the lion’s share of the costs of medical malpractice.


I do not disagree with Cato that most Democrats don't want to talk about tort reform because of their relationship to trial lawyers. George Lakoff has admitted as much:

Another multifaceted conservative strategic initiative is "tort reform," which has been made to sound like it is just about capping large damage awards and lawyers' fees. It is really a destruction of the civil justice system's capacity to deter corporations from acts that harm the public, since it is the lawyers' fees that permit the system to function. Moreover, if successful, it will also dry up one of the major sources of campaign finance for progressive candidates, which comes from trial lawyers.


As has Howard Dean:

"The reason why tort reform is not in the bill is because the people who wrote it did not want to take on the trial lawyers in addition to everybody else they were taking on, and that is the plain and simple truth. Now, that’s the truth.”


So in that sense Cato is right.

But that does not excuse blithely accepting a second-hand report of magical savings which turns out to emanate from a weasel-worded letter that is so thoroughly hedged in its conclusions as to be functionally meaningless.

To put it another way: if I am going to give liberals shit for trumpeting a CBO report on the savings entailed in the Baucus bill that did not actually examine the Baucus bill, then I also have to call conservatives for citing their own CBO report that doesn't actually deal in serious research or the issues at hand, and makes up numbers throughout.

It's called intellectual consistency, and it would be refreshing to see it occasionally from somebody around here besides (oh God am I really going to say this?) donviti on American foreign policy.

1 comment:

Waldo said...

But in SC, the trial lawyers are lining up with Republican Attorney General Henry McMaster, who's running for Governor.