NCPA - National Center for Policy Analysis

LITIGATION RAISING HEALTH CARE COSTS

March 15, 2006

An October 2005 report from the Manhattan Institute shows the efforts of trial lawyers to target health care providers for profit are raising U.S. health care costs, says Susan Konig of the Heartland Institute.

The Trial Lawyers, Inc. project at the Manhattan Institute's Center for Legal Policy concludes this area of litigation is significant because "health care represents over 15 percent of the U.S. economy, up from only 5 percent in 1961" according to U.S. Centers for Medicare and Medicaid Services (CMS) data.

The authors outline several areas of high cost associated with health care litigation, including:

  • Medical malpractice liability -- the "tort tax" on doctors and hospitals -- has grown much faster than overall health care inflation and costs the average American family of four more than $3,300 a year, according to a Tillinghast-Towers Perrin study in 2003.
  • Defensive medicine inflates health care costs by encouraging unnecessary procedures and referrals that doctors and hospitals prescribe in order to limit their exposure to future litigation.
  • Vaccines are particularly susceptible to litigation, and although Congress has shielded some existing vaccines from liability, new vaccines and other drugs vital to public health threats remain vulnerable.

When a liability system punishes indiscriminately, it does not efficiently deter bad conduct but rather reduces health care access by reducing the supply of doctors, the report's authors say. In addition, consumers are not made safer by product liability litigation over drugs and medical devices: "Such suits inevitably drive innovation from the marketplace that would lead to net health improvements -- not only for U.S. society but for the entire world."

Source: Susan Konig, "Litigation Raising Health Care Costs, Study Says," Health Care News, Heartland Institute, January 1, 2006.

Full study text:

http://www.triallawyersinc.com/healthcare/hc01.html

 

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