The threat of malpractice suits weighs heavily on physicians. According to an often-cited 2004 Congressional Budget Office (CBO) report, medical-liability system costs represent less than 2 percent of total health-care spending – excluding defensive medicine.
PricewaterhouseCoopers relied on that CBO to estimate cost estimates for defensive medicine. It concluded that the combined cost of malpractice insurance and defensive medicine comprised 10 percent of total health care costs. A 2010 Health Affairs article more conservatively pegged those costs at 2.4 percent of health-care spending.
In a 2010 survey, U.S. orthopedic surgeons bluntly admitted about 30 percent of tests and referrals were medically unnecessary and done to reduce physician liability to lawsuits.
Studies have found modest effects of malpractice reform. A more recent CBO report estimated that a package of five malpractice reforms would reduce national health spending by about .5 percent. Another 2010 Health Affairs study calculated that a 10 percent decline in medical malpractice premiums would result in less than 1 percent of total health-care savings. That is because medical malpractice insurance accounts for less than 2 percent of national health spending.
However, those costs are significant to physicians. Texas placed limits on malpractice damages in 2003. Liability rates fell from about $17,000 in 2003 to about $10,300 in 2011 for family physicians. Rates fell from more than $48,000 to about $30,500 for general surgeons and from $53,800 to $33,900 for obstetrics and gynecology.
The annual risk that physicians will be sued is about 5 percent in low-risk specialties, such as psychiatry and pediatrics, and a cumulative career risk of about 75 percent. In high-risk specialties such a neurosurgery and cardiac surgery, the annual risk is about 20 percent and cumulative career risk is 99 percent. About 1 out of every 5 lawsuits result in an average payment of nearly $275,000.
One out of 3 physicians do not agree with the need to tell patients about serious medical errors. However, fully informing them can defuse anger and lessen the likelihood that they will sue. Nearly 3 out of 4 plaintiff depositions in 45 lawsuits cited physician-patient “relationship issues,” such as discounting patients’ opinions or perspectives.
Some physicians specifically are reluctant to treat low-income patients because they fear potential litigation. For example, about half of California physicians who refused to treat Medicaid or uninsured patients cited what they perceived to be a heightened risk of being sued. However, studies show poor people are less likely to sue physicians because of limited access to legal resources and a medical malpractice payment system that requires advance funding to litigate cases.
Their malpractice concerns are the same regardless of whether they live in states that have adopted medical malpractice reforms. The emotional costs of being embroiled in litigation extracts a heavy psychic toll, and it is often cited by those who say they are burned out on practicing medicine. The fact that doctors almost inevitably will be defendants reflects the grip malpractice litigation has on the health-care system.
According to a Deloitte Center for Health Solution survey, more than 3 out of 4 physicians say they would be comfortable if liability reform included a court system with binding arbitration and a victims’ fund. Nearly the same proportion favored limits on pain and suffering for non-economic damages.