What's The Cause of Rising Health Care Costs?

Oct 23, 2013

Well, the rhetoric over the Affordable Care Act, Obama Care, is heating up. Amazing that a private health insurance plan that Republicans touted as a solution not so long ago, is now being attacked by those same Republicans as being “socialist,” while Democrats who supported a national single payer system, now defend a private insurance plan. We even have disagreement as to whether it is a good idea for every citizen to have insurance coverage.

One thing everyone agrees with is that the decades long increase in health care costs is a serious problem. Whether it's increasing health insurance premiums, rising drug costs, or escalating hospital prices, everyone agrees those costs need to be constrained, or even lowered. Obama Care has a direct impact in bringing down insurance costs for many, and providing coverage for many who had no insurance coverage, but it has limited impact on other direct medical costs.

In the midst of the rhetorical debate over Obama Care, one common refrain from Republicans has been the mantra that we need national medical malpractice tort reform to lower healthcare costs. Actually, tort reform seems to be the only solution that Republicans have offered for our health care woes. First, a definition, tort reform is just shorthand for limiting or taking away citizens' rights under the Seventh Amendment to have their case heard by a jury for the harms they suffer due to the negligence of a healthcare provider. However, there is at least one bright spot amongst Republicans in Congress – some Tea Party members are saying no to national tort reform as an unconstitutional derogation of individual and states' rights.

A pertinent question is: does 'tort reform' - stripping or inhibiting injured patients of their Constitutional right to a trial by jury for the injuries they have suffered - 'cure' our health care cost problem? Political sloganeering says yes, but the facts say no.

Montana already has much of the so-called 'tort reform' Republicans in Congress are touting. The Montana Medical Association has praised the forty plus pieces of 'tort reform' legislation passed over past decades – including a cap on damages. So what has all that stripping of Constitutional rights gained for Montana when it comes to health care costs? Well, the facts say nothing, actually.

According to research done by the Kaiser Foundation i Montana's per capita health care costs are around $6,640 per year. Nearby Wyoming has virtually no 'tort reform' and no cap on damages, yet their per capita costs are only 6% higher than Montana's. So, does that mean tort reform saves that 6% in costs in Montana? Well, no, there is no link – for example, North Dakota has 'tort reform' – including a cap on damages – and its per capita health care costs are 15% higher than Montana's. The only logical factual conclusion is that there are other factors at work when it comes to actual health care cost differences.

Further proof of that comes from Texas, where their nearly decade long experiment with tort reform has not yielded the promised lowering of health care costs. A study published in the Journal of Empirical Legal Studies examined the effect of Texas' 2003 tort reforms. The study's conclusion: “In sum, we find no evidence that Texas’s tort reforms bent the cost curve downward.”

So, no direct link between tort reform and health care costs, what are the causes? The Kaiser Foundation has looked at the numbers behind health care cost increases. While the particular percentages change from year to year, prescription drugs and new medical technologies continue as primary contributors to the increase in overall health spending. Kaiser also cites the rise in chronic diseases, with longer life spans and greater prevalence of chronic illnesses putting ever increasing demands on the health care system. Estimates put health care costs for chronic disease treatment at over 75% of expenditures.

Of course, the one sure way to reduce malpractice costs is to reduce the number of preventable errors that lead to patient harm. A study published last month in the Journal Of Patient Safety ii estimates that 210,000 to 400,000 American hospital patients die from preventable medical errors each year – one sixth of all deaths in the country. Using the lower number, only about 2% of those deaths result in a lawsuit. And, the study estimates that serious harm occurs 10 to 20 times more frequently than lethal harm.

The Affordable Care Act actually has provisions to improve patient safety – from the use of electronic records to prohibiting payments for hospital acquired conditions. Representative Daines says he favors increasing the quality of heath care, but he opposes the current law, and he has offered no other solutions.

The health care industry could receive total immunity from all lawsuits and it would lower health care costs only 2%.iii Yet the primary health care solution we get from Republicans is an empty political sound bite, 'tort reform.' Making it harder for injured people to seek justice is no solution, and it comes at a high cost – the further erosion of our constitutional rights.

This is Al Smith for the Montana Trial Lawyers Association.

i Kaiser Foundation:

ii Journal Of Patient Safety:,_Evidence_based_Estimate_of_Patient_Harms.2.aspx

iii Center For Justice and Democracy: