Lincoln, Healthcare and the Antebellum Lawsuit Problem

An exact dollar amount attributable to defensive medicine is hard to calculate but PriceWaterHouseCoopers estimates that more than $210 billion is spent each year in over-testing, including defensive medicine; a number almost an order of magnitude higher than the total amount spent by physicians and hospitals annually to purchase professional liability coverage. In other words, the cost caused by physicians endeavoring to avoid being sued is far greater than the cost paid for that risk.

With the healthcare reform debate raging, what would $210 billion purchase? How about a health insurance policy for every uninsured American, a national system of health information technology and enough change left over to address any number of unmet needs.

Groups such as the American Association for Justice (formerly the Association of Trial Lawyers of American) disagree with the aforementioned position. “Healthcare costs are rising; however medical malpractice litigation has nothing to do with it,” the group states flatly. The next argument is that the existence of trial lawyers and the liability system promotes overall safety. “Throughout history, the civil justice system has kept Americans safe by allowing them a fair chance to receive justice when they are injured by the negligence of others.” If only the medical malpractice system could deliver safety to all at no additional cost, life would be much better.

The numbers tell a different story. The tens of billions of dollars spent annually, either directly on litigation and compensation or indirectly via defensive medicine are real. Medical malpractice litigation is still pervasive (as it was in the 1850s). As to making things safe, we do not see the results promised. In 1999, the Institute of Medicine calculated that as many as 98,000 patients die each year from avoidable medical errors. More recently, HealthGrades published a study in April 2006 documenting total patient safety incidents at 1.2 million annually in 40 million hospitalizations covered by Medicare from 2002 to 2004.