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Texas Experiment With Medical Liability Caps Has Failed, New Report Shows

Dec. 17, 2009  

Texas Experiment With Medical Liability Caps Has Failed, New Report Shows

Costs Have Outpaced National Average, Uninsured Rate Remains Worst in Country and Doctor Shortage in Rural Areas Has Grown More Acute

WASHINGTON, D.C. – Medical malpractice liability caps instituted in Texas in 2003 have failed to improve the state’s health care system, a Public Citizen report released today reveals.

These findings are crucial because the Texas experiment has been held up as a model by proponents of proposals now pending in Congress to limit patients’ rights. In spite of rhetoric to the contrary, the data show that the health care system in Texas has grown worse since 2003 by nearly every measure. For example:

• The percentage of uninsured people in Texas has increased, remaining the highest in the country with a quarter of Texans now uninsured;
• The cost of health insurance in the state has more than doubled;
• The cost of health care in Texas (measured by per patient Medicare reimbursements) has increased at nearly double the national average; and
• Spending increases for diagnostic testing (measured by per patient Medicare reimbursements) have far exceeded the national average.

“Members of Congress have conjured the supposed benefits of the Texas law out of thin air,” said David Arkush, director of Public Citizen’s Congress Watch division. “The only winners have been the insurance companies and, to a lesser extent, doctors.”

The marked increase in diagnostic testing has occurred as medical malpractice payments in Texas have fallen 67 percent. “The combination of soaring testing costs and dwindling liability expenditures is devastating to the defensive medicine theory,” Arkush said. That theory claims that the fear of lawsuits has driven the increase in expenditures on tests.

Defenders of the Texas law claim it has prompted a massive influx of new doctors into the state, especially in underserved rural areas. But this, too, is false, according to state data. The growth in the number of doctors per capita in Texas has slowed since the liability law took effect. Meanwhile, the number of doctors per capita in underserved rural areas has decreased since 2003.

The only improvement shown by the data is a decline in doctors’ liability insurance premiums. But the reported 27 percent decrease in those premiums is dwarfed by the 67 percent reduction in malpractice payments, suggesting that liability insurance companies have pocketed most of the gains. The Texas data provide no evidence that patients or taxpayers have shared in the windfall at all.

READ the report.