Advocates have written open letters to politicians describing it as “the least-expensive and best-known way to lower healthcare costs.” Detractors have blogged that it has saved almost no money and instead “gutted patient rights.” Among the recent templates for whether and how to proceed on the contentious issue of tort reform, Texas has become a prime example of either the wisdom or the folly of capping medical liability payouts, depending on your vantage point.
Tort reform is backed by most doctors and the insurance industry but opposed by lawyers and consumer advocates. The Congressional Budget Office has documented increases in both medical liability premiums and average malpractice claim payments that have significantly outpaced inflation. Congress itself has largely punted on the issue, however, leaving most of the wrangling over specifics to individual states.
Which brings us to Texas. In reaction to the perception that unsustainable medical liability costs were driving away doctors and driving up healthcare costs, state voters in 2003 approved Proposition 12. Among its provisions, the state constitutional amendment capped noneconomic medical liability payouts at $250,000 in nearly all cases.
Much of the ensuing debate over whether Texas did the right thing has focused on cost: For example, will the reduction in malpractice claims translate into significant savings within the healthcare system? Is tort reform relevant in recouping the perceived waste from “defensive medicine,” in which physicians are presumed to order unnecessary tests and procedures out of fear of lawsuits?
More centrally, however, the question boils down to this: Does tort reform improve the ability of doctors to do their jobs, and the opportunity for patients to benefit from that care? So far, statistics, reports, and anecdotal information suggest that Texas has achieved the first goal but not necessarily the latter, highlighting the extreme difficulty in striking the right balance.
Kirk A. Calhoun, MD, who became president of the University of Texas Health Science Center at Tyler in 2002, points to two principal benefits of the state’s tort reform. First, the package of reforms led to a significant number of physicians migrating to Texas and helping to deal with the state’s chronic doctor shortage. For doctors, part of that attraction was the second big benefit, a significant decrease in liability insurance premiums.
“It has resulted in making Texas a more attractive state in which to practice medicine,” Dr. Calhoun says. “As a result of those expenses going down, we are able to better invest in our primary mission, and on patient care.”
Kenneth McDaniel, a program specialist in professional liability in the Texas Department of Insurance, says the dearth of affordable or available malpractice insurance in the state had spiraled into a crisis. “In Texas, we were staring at the brink of a chasm so deep that we virtually had to do something,” he says. “We were within probably some months or a year of having almost no malpractice insurance industry at all. It had become very dire.”
McDaniel stresses that the new liability cap is only for intangibles or pain and suffering, and it leaves intact the potential for higher economic damages. “But those can be predicted,” he says. “As soon as claims became more predictable, insurers started coming back into the field.” A summary of 17 companies’ rates supplied by McDaniel includes four new arrivals to the medical liability market and the return of a fifth.