Drawing on a large and growing body of literature examining medical malpractice, the Cato Institute, a conservative libertarian think tank, recently published a policy analysis performed by an economics professor which concluded that caps on damages caused by medical malpractice harm helath care consumers in many ways. The most obvious is that caps prevent some patients from receiving adequate compensation for their injuries. Caps limit compensation regardless of the severity of an injury. Whether the malpractice causes death, a minor transient infection, or anything in between, the maximum amount which can be awarded is the same. Caps generally also are not regularly adjusted for inflation, effectively reducing each year the value society places on medical harm. For example, California’s $250,000 cap on non-economic damages has remained unchanged since 1975, yet consumer prices have risen about 400 percent since that time.
Like other published research, the analysis also concluded that the current system for compensating victims significantly harmed by medical malpractice generally results in awards of appropriate damages in appropriate cases and disposes of meritless claims. As I have written previously, this is largely a result of the risks that must be born by lawyers litigating these cases. They are very expensive and time consuming. A lawyer who takes on meritless cases won’t be in business for very long. The fact that most strong claims settle also suggests that courts are doing a good job of providing good information about the kinds of cases in which plaintiffs are likely to prevail. On the flip side, however, most victims of medical negligence actually go uncompensated because the magnitude of an injury often does not justify the risk and expense of litigation. Accordingly, health care providers actually pass the burden of most of their medical errors to the victims, their families, and frequently, society as a whole.
The analysis also found that insurance comapnies play a vital role in promoting good care in a capless system. For example, in response to high premiums the American Society of Anesthesiologists launched a safety campaign which resulted in a dramatic reduction in surgical anesthesia-related injuries. Medical malpractice insurance carriers also use a variety of tools to reduce the risk of patient injury, including careful monitoring of physician conduct and incentives to provide better patient care. These responses are muted by the existence of caps which limit a carrier’s exposure.
The threat of litigation drives most of the activities designed to reduce medical errors which harm patients. Unfortunately, almost all of the research suggests a strong correlation between caps and poorer patient care, bad outcomes and greater health care costs. Damages caps cap the resources devoted to minimizing incidents of medical malpractice and ultimately harm us all.
The Cato analysis can be found at http://www.cato.org/pub_display.php?pub_id=13780.
