NCPA - National Center for Policy Analysis


October 13, 2009

Although the Congressional Budget Office (CBO) now believes that tort reform would significantly curb defensive medicine and its cost, the agency's numbers are still far short of the savings claimed by some advocates for tort reform.

For example:

  • A 2007 study by the National Center for Policy Analysis, a conservative think tank, put the annual cost of defensive medicine in 2005 between $100 billion and $178 billion.
  • In contrast, the CBO priced defensive medicine in 2009 at $6.6 billion.                                          

However, health care providers would enjoy a 10 percent cut in their malpractice insurance premiums if tort reform was enacted, according to the CBO:

  • In Miami, where premiums are the highest in the nation, that reduction would save $5,800 for a general internist currently paying a base rate of roughly $58,000, according to Michael Matray, editor of Medical Liability Monitor.
  • Minnesota general internists, whose base rate is $4500 per year, would save $450.

The $54 billion that tort reform shaves from the federal deficit over 10 years includes not only $41 billion in reduced spending for Medicare, Medicaid and other government programs but also $13 billion in increased tax revenue.  The CBO reasoned that decreased private-sector spending on health care would cut the cost of employer-based coverage, which represents taxable compensation.  As a result, taxable wages would increase, boosting federal tax revenue.

Source: Robert Lowes, "Tort Reform Could Reduce Malpractice Insurance Premiums by 10 Percent," Medscape Today, October 12, 2009.


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