The Zimmermann Note

This has come up quite a bit amongst Republicans as their solution to the healthcare costs skyrocketing and I thought I would offer my thoughts here. Tort reform is the idea that limiting caps on insurance settlements will in fact reduce costs. The argument is that by limiting caps, doctors will not be in the business of providing unnecessary tests and medical care i.e. act as “Defensive Doctors” for fear of being sued.

Tort Reform however, does not have many of the arguments of true conservatives, that being “Free Markets”, something that I find slightly odd and at the same time also find it odd that democrats do not support it either.

The total costs of malpractice is approximately 1-2% of total healthcare costs. I honestly believe that tort reform is necessary, however, my opinion is neither that of liberal or conservative viewpoints.

Costs associated with malpractice insurance will adversely affect certain specialties more often than others. For example, Obstetrics and Gynecology pays much more for malpractice insurance than your Internal Medicine physician.

However, even with Tort Reform, I do not believe that “Defensive Medicine” will become history. Fact is, doctors still do not like being sued. All it would do would be to lower the chances of outrageous liability suits occurring.  It might have some calming effects but it will not be the silver bullet either.

Tort Reform still does not answer the big issue with malpractice insurance in that one of the biggest costs of tort reform is the administrative and legal costs defending physicians. Just because a physician is being sued does not mean that the physician is liable, and in most cases these cases are either dropped or dismissed.  And because of these high costs, many times lawyers will not recommend to patients suing expecting lower settlements.

At the same time, with malpractice insurance rising, it is squeezing out certain specialties more than others. Also, we have to look at the situation where some states do not have the same insurance crisis as others might.

What I will argue and also find a bit humorous about the argument for Tort Reform is that it is not even ideologically based. Tort Reform is essentially having the government set up a “Regulated” market protecting physicians and and the health industry while not supporting the Legal Industry.  The common idea here is that its also a mandate to keep costs low for patients.

Next, we also have to realize that Insurance Companies are like large banks and they need a hefty amount of assets to stay afloat. Thus, investment income is a big component. They have shown that in situations when investment income takes a loss, that insurance rates rise due to the additional capital that needs to be undertaken to support malpractice claims.

So when investment income is high, the related costs for malpractice insurance will normally stay down but that in times when it is low malpractice insurance will rise in those states without caps but stay moderate in states where caps are in place.

Don’t you find this ironic? That the “Regulated” industry is being supported by conservatives that promote the “Free Market” system and liberals who do not?

The same time, this model would suggest that it is not the “Silver Bullet” which will lower costs but rather regulate them preventing the shocks within the malpractice market. I guess my message is that I would hope that liberals see that this is a good idea but to conservatives it is not the only idea.

Maybe to me, this is why I typically believe that you have to go beyond the talking points to find out the true story and in this case, I always find this funny because the argument here is more based upon what industries give to what party vs. actual ideology.  In this case they flipped.  Point being is that if you are a liberal democrat you can rest assured that this is okay.  I really do not think that suing a doctor for 10 million vs. 2 million will really make a difference. If the point is to send a message, it will get sent irregardless of the monetary amount.

However, in the long run I would really question whether lawsuits have a huge role in the Patient Care Model. This is also to liberals have a way of thinking that the best way to make sure nothing happens again is to punish and sue. (see Bush Administration War Crimes).  Yes, there will be situations where it will open eyes to current behavior but limits will not prevent this from happening.

Read as you may, and change your opinion as you may.