Yes, I saw that article as well. It is now 9 years old, and out of date. Quoting from http://www.medscape.com/viewarticle/751009 : "Premiums indeed rose dramatically in the early part of the new century, but in 2011, they declined for the fourth straight year for 3 representative medical specialties, according to a publication called Medical Liability Monitor (MLM). Its annual rate survey, highly regarded in the field, was published this week."
You first said the 2% doesn't include the impact of defensive medicine. I pointed out that it did include defensive medicine, so now you say it's magnified by other inefficiencies in the system. I don't believe you, because your arguments sound very hand-wavy, and don't change in the presence of contrary data. Do you have any evidence to strengthen your statement?
I could be even more hand-wavy and argue that the increase number of medical malpractice payouts is due to the medical system in the US getting worse. As http://content.healthaffairs.org/content/29/9/1565.full points out, "One way to attack the medical liability crisis is to make health care better and safer in the first place" and "Another key to limiting medical malpractice suits is to improve communication with patients immediately after an injury" and "Most health policy experts, he says, believe that “caps on damages [are] tangential to the real problems with the malpractice system, which involve excessive numbers of medical errors, inaccessible compensation for most avoidable injuries, and a slow, expensive process of dispute resolution that is inhumane to both plaintiffs and defendants”."
You pointed out that you know doctors paying over $100K/year in personal malpractice insurance. According to http://content.healthaffairs.org/content/29/9/1585.abstract "We found high levels of malpractice concern among both generalists and specialists in states where objective measures of malpractice risk were low. We also found relatively modest differences in physicians’ concerns across states with and without common tort reforms. These results suggest that many policies aimed at controlling malpractice costs may have a limited effect on physicians’ malpractice concerns." or as stated in http://content.healthaffairs.org/content/29/9/1565.full "Emily Carrier and colleagues find that physicians’ perceptions of the threat of being sued are out of step with their actual risk of being the target of a malpractice lawsuit."
In other words, those doctors might not be needing the $100K+ coverage which they are paying for.
According to http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/... , "health care costs for chronic disease treatment account for over 75% of national health expenditures" and "At least 7% of health care expenditures are estimated to go toward for the administrative costs of government health care programs and the net cost of private insurance."
Those two factors - which you didn't mention in your list of four things affecting the increase in medical rates - are both larger than the 2.4% we're talking about related to malpractice.
2.4% is 20% larger than 2%. That .4% represents something like 8 billion a year which is ya know a lot of money. I have also seen numbers close to 3% from a few sources.
If you want a less hand wavy answer why 2.4 was still to low insurance is inefficient. Here is a link to one company lowering it's rates after the recent change in how inefficient they can be: http://www.ctmirror.org/story/12550/aetna-seeks-cut-health-i...Beginning this year, the federal health reform law requires insurance companies to spend at least 80 percent of the money they collect in premiums on health care costs for individual and small-group plans, and 85 percent for large-group plans. Several company's where over that limit. Anyway, going from the direct cost of 2.4% though an 80% efficient insurance company means .024 / .8 = 3% of someones insurance premiums go to paying that 2.4% direct cost. It's a little worse than that because insurance also requires the provider to create the bill and that time is then indirectly billed back to the insurance company's.
But, still all of this is really nitpickey. It's not really sometime I care about, I just used the word as one of several inefficient part's of the system we have now. I am fine suggesting the dead weight is somewhere between .5% and 3.5% of total healthcare spending, but that's still something like 100,000 or more million dollars every 10 years.
Oh come on, I first said "something like 2%" and after a short bit of research found the number was 2.4%. Not bad for a several year old memory, I think.
Neither you nor I have read that paper which gives the 2.4% value. It may have included the insurance overhead already.
In any case, the health reform law you linked to covers medical insurance for patients, while the 2.4% we're talking about is malpractice insurance for doctors. You can't apply the numbers from one system directly to the other.
The US is the third most populous country. Of course any numbers related to health care are going to be huge. We spend 2.6 trillion or so on health care in a year. You can do as you did and use 100 trillion over 10 years, or you can say that $10 billion per year / population of the US, is $32 per year, or under 0.10 cents per day per person. Note that 2.6 trillion / population of the US => $8,387 per person per year, and 2.4% of that is $201 per person per year or $23 and $0.55 per person per day, respectively.
Quoting again from Wikipedia: "In December 2011, the outgoing Administrator of the Centers for Medicare & Medicaid Services, Dr. Donald Berwick, asserted that 20% to 30% of health care spending is waste. He listed five causes for the waste: (1) overtreatment of patients, (2) the failure to coordinate care, (3) the administrative complexity of the health care system, (4) burdensome rules and (5) fraud."
I do not know if (1) is due to defensive medicine or other reasons. For example, when I broke my toe, I asked for extra x-rays even though it wasn't needed. I know friends who got MRIs even though not essential, because it was included in their insurance plans. Or since the doctor gets reimbursed per test, there's a financial incentive to do more tests (so long as cost less than the reimbursement).
Searching now, I found no useful numbers about the overall cost of defensive medicine. Indeed, it seems to be pretty hard to resolve. I came across the statement that "variation in intensity of treatment from one hospital or city to the next has been well documented among the government's veterans hospitals, where there is no financial or business drive for more rather than less treatment", so it's going to be noisy data.
Doctors do commit malpractice. There has to be some system in place to handle that. Our system now is through the courts. Just how bad are 'frivolous' medical lawsuits?
Let's take http://en.wikipedia.org/wiki/Medical_malpractice#The_case_fo... as the source for numbers. This should be biased for the doctors. The AMA says 60% are dropped without payment and do not go to trial, costing $22,000 in fees. ... Sneaky AMA! Notice that it does not list the percentage of payments made without going to trial. This makes that section unusable for what I was going to do.
I had to go to http://bjs.ojp.usdoj.gov/content/pub/pdf/mmicss04.pdf and find that in the states where payout and lack of payout is required to be reported (ie, Missouri and Maine), some 1/3rd of claims get a payout. Median payout (using Missouri's numbers since they have 8x more reported cases than Maine) is $110,000 for 2,598 cases out of 8,379 total cases. Of these, under 5% are reached by a trial decision.
So, 65% get no payout, and each costs the doctor (using the AMA numbers) $22,000 in legal fees. 30% gets a payout of $110,000 and costs the doctor $22,000 in legal fees, and 5% are reached by trial, of which 90% is found to have no payment (at $110,00) to defend and 10% is found to have a payment of $342,000 and still needs $110,000 to defend. Further, there are about 17,000 cases per year in the US.
Costs because the doctor was actually negligent: (0.30 * (110+22) + 0.05 * 0.1 * (342+110)) * 17000 = $700 million.
Costs because the doctor was incorrectly accused as being negligent: (0.6 * 110 + 0.05 * 0.9 * 110) * 17000 = $1200 million.
Hence, even if you could magically make all frivolous cases disappear, you could only reduce the payouts+legal expenses by 60%, and you almost certainly wouldn't make defensive medicine practices disappear because there will still be court cases, and some rare ones in the $1,000,000+ range.
This is something I'm nitpickey about because I see liability lawsuits as being the only strong tool individuals have against negligent practices. I don't want to see legislative attempts to curtail that power when the underlying justifications are unfounded. From what I can tell, the cost for overtreatment and liability, while large in aggregate numbers, is simply not one of the major reasons for increasing health care costs in the US. Especially since liability rates haven't gone up the last three years.
This is something I'm nitpickey about because I see liability lawsuits as being the only strong tool individuals have against negligent practices.
Ok, I get where your coming from.
The problem I have is lawsuits is they are expensive AND ineffective. So many things have to happen before cutting off the wrong leg actually get's back to those responsible that losing a 2 million dollar gross negligence lawsuit is less meaningful for a doctor than winning the lawsuit and losing their licence. There are some really bad doctors out there, but because there are still insurable because it's fairly random when someone get's sued so it takes a long list of errors before they need to look for other employment. Moving can also help cover someones medical misdeeds.
The simplest way to cut down on medical errors is to limit how long someone can be on call. Life or death decisions at the end of a 12 or sometimes 16 hour day is just insanity. Yet, it's all to common for someone to end up pulling an 18 hour shift.
As to the awards, you can't just take payouts and say this money ends up in the hands of those who where miss treated. Court cases are expensive and it's not uncommon for someone to receive well below 1/2 the stated award after their legal team get's it's cut. It also tends to take a long time.
My suggesting would be a system with automatic and harsher penalty's where people and institutions are penalized for their average mistakes over time not just the occasional one off case they can buy insurance to cover. And where people who have been mistreated can automatically receive reasonable compensation without the protracted legal battle. Unfortunately, I have no idea of how to implement such a system.
PS: Then again, I am not really a doctor either. Just some random nerd who has really enjoyed this disunion on a late Sunday afternoon. I will even say you win the point if it makes you feel any better.
Yes, that gets back to an issue I highlighted earlier, which is the need to reduce malpractice in the first place. There's a lot of ways to do it. I agree that unfortunately, we've decided that the courts are the right place for feedback.
Doctor review boards, for example, are woefully hesitant to chide doctors who continue to have bad practices. Politicians are equally hesitant to put the nose of "big government" into oversight.
Frankly, one of the reasons I'm in favor of nationalized general health care is that it tightens the feedback between the people who pay for health care and the people who do oversight.
Thanks for the opportunity to do the research on the topic and improve my own understanding.
You first said the 2% doesn't include the impact of defensive medicine. I pointed out that it did include defensive medicine, so now you say it's magnified by other inefficiencies in the system. I don't believe you, because your arguments sound very hand-wavy, and don't change in the presence of contrary data. Do you have any evidence to strengthen your statement?
I could be even more hand-wavy and argue that the increase number of medical malpractice payouts is due to the medical system in the US getting worse. As http://content.healthaffairs.org/content/29/9/1565.full points out, "One way to attack the medical liability crisis is to make health care better and safer in the first place" and "Another key to limiting medical malpractice suits is to improve communication with patients immediately after an injury" and "Most health policy experts, he says, believe that “caps on damages [are] tangential to the real problems with the malpractice system, which involve excessive numbers of medical errors, inaccessible compensation for most avoidable injuries, and a slow, expensive process of dispute resolution that is inhumane to both plaintiffs and defendants”."
You pointed out that you know doctors paying over $100K/year in personal malpractice insurance. According to http://content.healthaffairs.org/content/29/9/1585.abstract "We found high levels of malpractice concern among both generalists and specialists in states where objective measures of malpractice risk were low. We also found relatively modest differences in physicians’ concerns across states with and without common tort reforms. These results suggest that many policies aimed at controlling malpractice costs may have a limited effect on physicians’ malpractice concerns." or as stated in http://content.healthaffairs.org/content/29/9/1565.full "Emily Carrier and colleagues find that physicians’ perceptions of the threat of being sued are out of step with their actual risk of being the target of a malpractice lawsuit."
In other words, those doctors might not be needing the $100K+ coverage which they are paying for.
According to http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/... , "health care costs for chronic disease treatment account for over 75% of national health expenditures" and "At least 7% of health care expenditures are estimated to go toward for the administrative costs of government health care programs and the net cost of private insurance."
Those two factors - which you didn't mention in your list of four things affecting the increase in medical rates - are both larger than the 2.4% we're talking about related to malpractice.