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Malpractice Liability Limits Part Of Approach To Lower Deficit

Wed, 07/20/2011 - 7:22am

The deficit reduction plan floated by the "Gang of Six" senators would include using a Judiciary committee to find an unspecified amount of savings from medical malpractice reform, presumably by limiting settlements. A November 2010 study by the U.S. Department of Health and Human Services shows that medical errors contribute significantly to increases in the federal deficit. HHS reports that about 1 in 7 hospital patients experience a medical error, 44 percent of which are preventable. These errors cost Medicare alone $4.4 billion a year, not including additional costs required for follow-up care.

Some argue that medical liability limits are likely to increase spending due to the costs of caring for patients who are injured by doctors' mistakes but cannot hold them accountable. The Congressional Budget Office (CBO) has estimated that enacting medical liability limits would provide savings, but only at a minimal level. Half these savings are projected to result from reductions in medical malpractice insurance rates.

CBO credits the other half of its projected savings to expected reductions in defensive medicine. Critics argue that this analysis does not consider the increase in medical errors and the resulting healthcare utilization. Any reduction in defensive medicine would be countered by the higher healthcare costs resulting from an increase in medical negligence.

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