What We Need Is Real Tort Reform--Not Snake Oil : Health care: Despite what the Clintons say, it’s legal fees, not drug prices, that are too high.
President Clinton promised that his health-care package would include tort reform. His “reforms” are snake oil. Several state governments have tried them before without noticeable effect. Absent are caps on awards for pain and suffering. There are no curbs on punitive damages. The net effect is to worsen a crisis.
Doctors spend $10 billion a year on malpractice insurance. This is more than we spend for research on cancer, AIDS and Alzheimer’s disease. It is more than the combined annual profits of our top five drug companies: Merck, Bristol-Myers, Johnson and Johnson, Abbott Labs and Pfizer.
How does Clinton’s favorite health-care scapegoat, the pharmaceutical industry, compare with the tort industry as a cause of inflation?
American drug companies charge 30% more than their German counterparts. But American malpractice costs are 1,400% higher than in Germany. Lawyers’ fees devour an appalling 60% of malpractice and product liability awards. Drug profits pay for drug research; tort awards pay for litigation.
Drug prices rankle consumers who must pay them out of their own pockets. Predatory lawyers escape notice because the cost of litigation is built into product prices, doctors’ fees and hospital bills.
The cost of malpractice and liability insurance is only the tip of the iceberg. The tort industry also undermines health-care quality.
Liability concerns drive useful products off the market. Research on new medical devices, drugs and vaccines is slowed or abandoned for fear of suits. Surgeons avoid operations with high malpractice risk. Medical procedures are revised at great expense not to improve patient care, but to make suits more difficult.
Doctors and hospitals order an overkill of tests, X-rays and drugs “just to make sure;” then they document every move, creating a pandemic of paperwork. This defensive medicine inflates bills 20%, and it bloats the cost of dying while prolonging its agony. The sole rationale of defensive medicine is liability protection for doctors and hospitals.
These are the costs of the tort industry. Beyond windfalls for lucky plaintiffs and rich lawyers, its benefits are negligible.
The benefits of our drug industry are substantial. It leads the world in research, creating hundreds of thousands of quality jobs for Americans. Drug research has extended or improved millions of lives and cut down on hospitalization and long-term care.
New drugs have sharply lowered the death rate from heart attacks, virtually eliminated surgery for ulcers, slashed care costs for AIDS and reduced the perils of infectious disease. With profits from its discoveries, the drug industry is financing biotech, our best hope for major breakthroughs in AIDS, cancer, Alzheimer’s, multiple sclerosis and other killers.
To be fair, drug prices may need some fine tuning. Price gouging inflicts damage, as the overpriced AIDS drug AZT has painfully demonstrated. But our economy is stronger, our health care is better and our quality of life is higher because of pharmaceuticals.
The President needs to stop health-care inflation. This will require strong medicine--he must end the medical-litigation lottery that fuels inflation and lowers health-care quality. Caps on awards for “pain and suffering” are essential. Punitive damages should become fines paid to a national health-care fund. Finally, let the first price controls be imposed on legal fees--limit them to 15% of settlements over $100,000.
No one should be fooled by Clinton’s “tort reform.” It won’t save a dime. Its cynical purpose is to make the public forget his ties to the trial lawyers, his fattest campaign contributors. Clinton hopes to scapegoat doctors and drug makers for the inflationary sins of lawyers. He should quit playing politics with our health care and get serious about tort reform.
