Fear of Lawsuits Is Not Why We Spend So Much On Health Care

You surely know that a good part of the reason our health care system is so expensive is the scourge of "defensive medicine," where doctors order test after test just so that if the patient doesn't get the outcome they want, it'll be harder for them to sue on the grounds that one more MRI or CAT scan would have made all the difference. Making it difficult for people to sue, then, should bring down the cost of health care, right? Actually, no:

There's been a long-running theory that one reason medical costs are bloated is that doctors are scared of medical malpractice suits, so they order expensive and unnecessary tests to protect themselves from liability.

But in three states over the past decade that enacted laws to put stricter limits on medical malpractice lawsuits, there hasn't been much of an impact in the volume or cost of emergency room care, a new Rand Corporation study shows.

The finding suggests that doctors "are less motivated by legal risk than they themselves believe," casting doubt on the level of savings that could be achieved through medical malpractice reform, according to the study published in the New England Journal of Medicine on Wednesday. The findings try to help clarify a topic still up to for debate — just how much wasteful "defensive medicine" could be eliminated from health care.

It's possible that the dynamics are different in emergency rooms than in other kinds of care, but I doubt it, because other evidence shows that "tort reform" hasn't affected spending overall. For instance, in Texas, they passed a constitutional amendment in 2003 that made it almost impossible to recover meaningful damages from medical malpractice. That was good for doctors—the number of malpractice claims plummeted, and malpractice premiums went down—but instead of falling, health care costs in the state actually rose faster than in the rest of the country.

That doesn't mean that defensive medicine in the form of overtesting is a myth. But it happens for lots of reasons that have nothing to do with the fear of lawsuits; the medicine could be defending against loved ones, or just against uncertainty. I have a doctor friend who deals with lots of patients at the end of their lives, and he tells me that he comes under enormous pressure from patients' families to try absolutely everything that holds out even the tiniest shred of hope. And I'm sure a lot of doctors end up ordering more tests just because they can. If you think that a patient probably tore the cartilage in her knee but you're only 85 percent sure, and you can order an MRI and know for 100 percent, why not do it? It's a fantastic diagnostic tool. That's not even to mention all the doctors who own their own imaging centers and have a financial incentive to pad their own bottom lines.

When you ask Republicans what they'd like to do to reform American health care, the first thing out of their mouths is usually "tort reform." But the fact that all the evidence suggests it would do nothing to cut costs is probably not going to dent their commitment to laws limiting people's ability to sue for malpractice. That's because the truth is that conservatives see this as a moral question as much as a fiscal one. "Frivolous lawsuits" make them livid, and as far as they're concerned a frivolous lawsuit getting filed (even if it never goes anywhere) is a greater outrage than someone who was victimized not being able to get compensation. So the facts aren't going to help much.