The Doctored Crisis
By Taylor Lincoln and David Arkush
Introduction and Summary
Proposals to limit medical malpractice liability are a perennial feature of health care de- bates. Those favoring liability limits have long sought to convince the public and policy makers that their preferred course would benefit not just providers, but also the general public, by reducing medical costs. At present, the principal claim of those seeking to limit liability is that malpractice liability causes massive extra costs through “defensive medi- cine”: Fear of litigation leads doctors to exercise grossly excessive caution, ordering unnec- essary tests and procedures.1 The Department of Health and Human Services determined that U.S. health care costs in 2009 had risen to $2.5 trillion, 17.6 percent of the nation’s gross domestic product (GDP). With health costs soaring, many diehard tort reform advo- cates have renewed their efforts, promising caps on liability as an elixir for health cost con- trol.
Current House Speaker John Boehner (R-Ohio) claimed in 2010 that “medical malpractice and the defensive medicine that doctors practice” is the “biggest cost driver” in all of medi- cine.2 Other colleagues of his agree. Darrell Issa, the new chairman of the House Committee on Oversight and Government Reform, has said “As much as $210 billion is spent on defen- sive medicine annually.3 The largest claim among Boehner’s colleagues was made by a phy- sician, Rep. Tom Price (R-Ga.), who said, “Defensive medicine isn’t an abstract notion, and it could be responsible for more than $650 billion in unnecessary health care spending every single year [26 percent of health care spending].”4
Are Reps. Boehner, Issa and Price correct? The reliable empirical evidence paints a vastly different picture. In short, claims such as those above about defensive medicine are wildly overblown. Increasing numbers of published, evidence-based studies by academic re- searchers come to strikingly different conclusions about the magnitude of defensive medi- cine. Instead of the 26 percent of health care spending claimed by Price, the majority of studies that have attempted to put an overall price tag on defensive medicine have found that it amounts to only 1 or 2 percent of total health care costs, if that.
Moreover, compelling evidence suggests that much of the activity attributed to defensive medicine may stem from another source: the financial incentive to order unnecessary tests and procedures. As a recent report by the Congressional Research Service concluded, “some evidence suggests that factors other than defensive medicine, such as physician payment systems (e.g., fee-for-service vs. capitation) and financial incentives, may explain the alleged over-provision of health services.”5
Some defensive medicine exists. But even in high-risk scenarios involving specialties that are at the highest risk for litigation, defensive medicine appears to be responsible for only a very small percentage of medical decisions, most of which involve diagnostic testing. More- over, many practices that some would call defensive may be sound exercises of medical caution and therefore should not be categorized as waste.
This report, based on reliable published studies, covers the following topics:
- The most empirically sound, evidence-based studies of defensive medicine usually find that its role is small.
- Factors other than defensive medicine, such as financial incentives to order more tests, offer much better explanations for many of the practices that liability oppo- nents deem defensive.
- Defensive medicine cannot be driving the fast-paced growth of health care costs be- cause the costs of diagnostic testing—the principal type of purported defensive medicine—are small in proportion to overall health care spending.
- Malpractice litigation has declined, but the decline has not slowed the growth of health care costs. Malpractice litigation is at the lowest level on record, and there is no evidence that the decline in litigation has slowed the growth of health care costs. This may because fear of litigation is unrelated to actual risk of litigation.