The Cost of Health Care and the Effects of Defensive Medicine
Turn on any news channel or read any newspaper and I guarantee you will find a headline concerning healthcare reform. This national preoccupation stems from an increasingly undeniable truth – we need to change the way we run health care in this country. And experts widely agree; in this quest for healthcare reform, controlling spiraling costs is key. In 2006 alone, the government reported that total health care costs in the United States exceeded $2.1 trillion, constituting one-sixth of the nation’s GDP, and the figures continue to rise unsustainably. High medical costs are often attributed to the consumer, who demands more expensive state-of-the-art technologies, is aging, and is living longer than ever. This analysis, however, overlooks factors affecting physician behavior. Chiefly, some studies suggest that the risk of malpractice liability increasingly pressures doctors into prescribing extra and often unnecessary treatments, a practice known as “Defensive Medicine.”
The Congressional Office of Technology Assessment in 1994 defined defensive medicine as occurring “when doctors order tests, procedures, or visits, or avoid high-risk patients or procedures, primarily (but not necessarily or solely) to reduce their exposure to malpractice liability.” There are two different categories of defensive medicine: positive and negative. Positive defensive medicine, known as assurance behavior, regards the addition of while negative defensive medicine, or avoidance behavior, involves referring a patient to another physician or refusing to see a patient altogether in order to avoid the risk of liability.
A widely cited report in the Journal of the American Medical Association surveyed many physicians in Pennsylvania with a high risk of malpractice liability. The study found that 93 percent of doctors who responded reported to have “sometimes or often engaged in at least 1 of the 6 forms of defensive medicine outlined in the survey.” The six forms included ordering extra tests, prescribing extra medications, referring patients to specialists unnecessarily, suggesting invasive procedures for confirmation, avoiding certain procedures, and avoiding high-risk patients altogether. The report found that three in five doctors had ordered more tests than necessary and over half the doctors reported referring patients to specialists unnecessarily. Results, however, varied between specialties; emergency physicians ordered more tests than the others. More frighteningly, almost two in five doctors admitted to have avoided high-risk patients, an action most prevalent with orthopedic and neurosurgeons and least frequent with emergency physicians.
Defensive medicine increases the cost of health care in America by an estimated $99 to $179 billion a year, or about 7 percent of total national healthcare expenditures according to the Journal of the American Medical Association. These costs mainly include extra, unnecessary tests and operations. Unsurprisingly, this large figure has led to an increase in insurance premiums across the board, from consumer health insurance plans to physician liability insurance..
Ironically, quality of care also takes a beating as doctors are forced to become more cautious. A news release by the American College of Obstetrics and Gynecologists stated that “70% of ob-gyns have made changes to their practice because of the lack of available or affordable medical liability insurance,” and only a slightly fewer amount have done so due to the risk of liability claims. More harrowingly, “between 7-8% have stopped practicing obstetrics altogether because of either insurance affordability or availability issues or the risk or fear of being sued.” Access to prenatal care and neonatal surgery has also been noticeably affected. An article in The Guardian also noted an increase in Caesarian sections from 22% to 22.7% caused by the high cost of ob-gyn-related malpractice suits and an increase in defensive medicine, ultimately citing that “the cry is that doctors now have one eye on the law courts instead of both eyes on the patient.” In the Emergency Room, one study found that physicians with a high fear of malpractice were less willing to discharge low-risk patients. These physicians also admitted more patients into the intensive care unit and ordered more tests.
The fear of malpractice does, to an extent, force doctors into taking their job seriously and making sure their actions are of the best quality—or are sufficient legally. From the point of view of a patient who can afford health care, this extra caution is certainly welcomed. But of course, on the downside, there is an overall increased cost to the system when patients stay longer or undergo more tests and access for others is decreased when low-risk patients take up hospital beds.
This phenomenon has affected the states to differing degrees—and specific states have attempted to solve the problems caused by malpractice liability through legislation. Malpractice suits, which fall under tort law, can cost physicians many hundreds of thousands of dollars—the average award being $637,134 in 2006—and up to a thousand dollars in defense fees alone.
One commonly cited study found that tort reform in regards to malpractice in certain states has led to a growth of the number of physicians. In fact, reports have shown that medical liability is one of medical school students’ and residents’ top concerns. Half of the students who responded to an AMA survey stated that medical liability “was a factor in their specialty choice.” A piece from the American Academy of Orthopedic Surgeons cited a study that showed how one in three ob-gyn residents in Pennsylvania plan on leaving the state, which is known for its lack of regulations and high liability prices, after they are done. Philadelphia, besides suffering the loss of fresh physicians, has also suffered from the closure of eleven maternity wards due to liability issues. Physicians are legally worse off in Tennessee, where “between 1995 and 2005, 100 percent of cardiac surgeons, 92 percent of obstetrician-gynecologists, 92 percent of orthopedists and 70 percent of all doctors … faced legal actions.”
In response, twenty-four states have imposed caps on non-economic damages. Six more states have imposed caps on total lawsuit damages. In 1975, California passed the Medical Injury Compensation Reform Act (MICRA). This act has been regarded by medical associations around the nation as the proper way to address tort reform and malpractice liability. MICRA contains a hard cap of $250,000 on non-economic damages, averting much defensive medicine as well as reducing malpractice insurance premiums. Obstetricians and gynecologists, for example, pay an average of $63,272 per year in Los Angeles, while the same physicians in Miami, where tort reform does not exist at an adequate level, must pay $275,466. Beyond insurance costs, MICRA has streamlined the malpractice process in California. Lawsuits are settled in one-third less time, which further lowers costs and allows patients who deserve payment to receive it quicker.T ort reform has reduced overall healthcare costs by 5 to 9 percent, which has made the California system the go-to model for national reform.
There is an effort to apply the lessons of California to the nation at large. The American Medical Association, for example, supports a federal $250,000 cap on non-economic damages. If 5 to 9 percent of the total health care costs in the United States could be cut, an estimated $126 billion would be saved. Government expenditures, like Medicare, could reduce in size by up to $50 billion dollars.
Tort law exists to prevent against negligence. It relies on the idea of a “standard of care,” which is especially important in the medical field, as it holds doctors responsible for their patients’ wellbeing. However, fears of malpractice—which can ruin a professional financially and in reputation—significantly alter how physicians behave. In the worst cases, doctors refuse to take cases altogether. Extra tests and procedures to double-check a diagnosis are often unnecessary, ramping up the costs of the overall healthcare system. This excess has become the new standard of care, and nowadays, anything less than too much can be found as negligent. But doctors are speaking up, and legislators today are realizing the long-term costs—in terms of finances, quality, and access—of malpractice suits. It’s only a matter of time before we start to see nationwide reform.