In the almost two decades I've been a health and tech policy wonk, I've heard exactly two utterances that could and should be etched in medical economics stone:
•"When you have the cash flow of a hospital, you can do whatever you want with the numbers," told to me by a grumpy old doc in southern California who predicted with stunning accuracy what a chain's takeover of a venerable old community hospital would mean; and
•"Insurance is for the outliers," told to my wife and me by a pediatric cardiologist who was examining our then six-week-old son, who had been born with a mysterious liver anomaly (which, thank everything sacred everywhere in the universe, cleared itself up).
Insurance is for the outliers. Unless, of course, those outliers are unfortunate enough to have suffered from some kind of catastrophic medical error. Then, the supposed actuarial precision that correlates likely payouts in settlements and cases that go on to litigation has been thrown all to hell by the spin machines of both organized medicine, its adversaries in the plaintiffs' bar, and the ideological adherents of the various political entities for which "tort reform" is a serious issue.
When I was a staff news guy for the L.A. County Medical Association back in the mid- to late-1990s, they used to fly the politically active docs and "key staff" up to Sacramento for a day every year to schmooze the county's legislators. And one of the evergreen "fall on your sword" issues that got covered every year was the Medical Injury Compensation Reform Act, MICRA, which capped non-economic damages in malpractice judgments at $250,000. In 1975. And as of 2011, that cap had never been adjusted upward, let alone eliminated. Because, like the Ten Commandments and the principle of "You should always take the best athlete available regardless of position," MICRA was absolute shibboleth: were it to be messed with, the world as we knew it was over.
Well, somebody just messed with the idea that catastrophic payouts lead to ruin. Using data, no less. And he's a doctor. In a study published online in the Journal for Healthcare Quality, a team of researchers at Johns Hopkins University, led by Marty Makary, M.D., have introduced what should be a game-changing inflection point into the whole "tort reform" argument.
In their review of malpractice payouts over $1 million, the researchers say those payments added up to roughly $1.4 billion a year, making up far less than 1 percent of national medical expenditures in the United States.
“The notion that frivolous claims are routinely resulting in $100 million payouts is not true,” Makary, an associate professor of surgery and health policy at the Johns Hopkins University School of Medicine, said in a statement accompanying the study's publication. “The real problem is that far too many tests and procedures are being performed in the name of defensive medicine, as physicians fear they could be sued if they don’t order them. That costs upwards of $60 billion a year. It is not the payouts that are bankrupting the system — it’s the fear of them.”
In our rush to adopt "data-driven medicine," we have to remember that sometimes the data tells us stuff we don't necessarily want to hear. It will be extremely interesting to see how the data Makary and his team have parsed will affect the practice and cost of medicine, but the odds are not long that somebody with a vested interest in "tort reform" will come out with something contradicting Makary's findings. And premiums of all types, from individual customer coverage to malpractice, will just keep going "up, up, up, up, up!" as that famous alumnus of the London School of Economics, Michael Jagger, once opined in a lowbrow but popular forum.
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