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New Public Citizen Report: Texas’ Health Care System Has Worsened Significantly Since Imposition of Liability Caps

Oct. 12, 2011 

New Public Citizen Report: Texas’ Health Care System Has Worsened Significantly Since Imposition of Liability Caps

Doctors and Insurance Companies Benefit, Malpractice Victims and Taxpayers Lose

WASHINGTON, D.C. – While many politicians and commentators hammer away at the idea that medical malpractice litigation is to blame for the country’s skyrocketing health care costs, a new report issued today by Public Citizen debunks this notion by analyzing health care in Texas. There, the imposition of medical liability caps in 2003 – which prevent the most severely injured patients from being fully compensated for damage caused by bad doctors – has not reduced medical costs or curbed the ordering of expensive diagnostic tests. Instead, health care is less available and has become more expensive compared to national averages.

The report, “A Failed Experiment: Health Care in Texas Has Worsened in Key Respects Since State Instituted Liability Caps in 2003,” analyzes the costs and availability of health care since Texas imposed a $250,000 cap on the amount of non-economic damages that injured patients could recover from negligent doctors. Since the cap was implemented, malpractice litigation in the Lone Star state has plummeted dramatically, but Medicare spending has soared. This contradicts the “defensive medicine” theory, which holds that fear of litigation is to blame for stark increases health care costs. Also since the caps were instituted in Texas, health insurance costs have outpaced the national average and the percentage of residents lacking health insurance has risen.

“Despite the sales campaign to promote Texas as an exhibit of the merits of limiting doctors’ liability for mistakes, the real world data tell the opposite story,” said Taylor Lincoln, research director of Public Citizen’s Congress Watch division and author of the report. “Health care in Texas has become more expensive and less accessible since the state’s malpractice caps took effect.”
Added Tom “Smitty” Smith, director of Public Citizen’s Texas office, “This report shows that the rest of the nation should not hold up Texas as a model. The only winners in Texas are the doctors and the insurance companies.”

Since Texas instituted its liability limits:

  • Per-enrollee Medicare spending in Texas has risen 13 percent faster than the national average;
  • Medicare spending specifically for outpatient services in Texas has risen 30.7 percent faster than the national average;
  • Medicare diagnostic testing expenditures in Texas have risen 25.6 percent faster than the national average;
  • Premiums for private health insurance in Texas have risen faster (51.7 percent) than the national average (50 percent);
  • The percentage of Texans who lack health insurance has risen to 24.6 percent, solidifying the state’s dubious distinction of having the highest uninsured rate in the country;
  • The per capita increase in the number of doctors practicing in Texas has slowed to less than half its rate in the years leading up to the caps;
  • The per capita number of primary care physicians practicing in Texas has remained flat, compared to a sharp increase in the years leading up to the caps; and
  • The prevalence of physicians in non-metropolitan areas has declined.

The two groups that have benefited the most from the restrictions are liability insurance companies and physicians, Public Citizen found. Since the caps were imposed, doctors have been held less accountable for their errors. The number of payments made on behalf of Texas doctors to compensate patients for medical errors fell more than 50 percent between 2003 and 2010, and the value of those payments fell by nearly 65 percent, without adjusting for inflation. But insurance companies have cut doctors’ malpractice insurance premiums more slowly. Viewed in the contexts of starkly rising costs and diminished accessibility of care, these figures show that regular Texans have received nothing in exchange for ceding their legal rights.