The Need for Medical Liability Reform (August 2009)

AMA continues to believe that medical liability reform is essential to any healthcare cost containment strategy. AMA has strongly urged Congress and the Obama administration to include meaningful medical liability reform as a critical component of health system reform.

• The cost of our medical liability system is borne by everyone as defensive medicine adds billions of dollars to the cost of healthcare each year, which means higher health insurance premiums and medical costs for all Americans. A 2003 U.S. Department of Health and Human Services (HHS) report estimated the cost of defensive medicine to be between $70 billion and $126 billion per year. Updating this to national health expenditure data from 2005, the cost is $99 billion to $179 billion dollars per year (“Addressing the New Health Care Crisis,” U.S. Department of HHS, March 2003).
• Physicians who win at trial still have large fees to pay for their legal defenses. The defense costs for these cases average nearly $94,000. And, in cases where the claim was dropped or dismissed, costs to physicians average nearly $19,000 (Physician Insurers Association of America, 2005).
• For states that have not been able to pass comprehensive medical liability reform laws, AMA supports federal grants to allow the exploration of state- or local-based demonstration or pilot programs that have the potential to improve the current litigation climate through measures that could expedite equitable resolutions of disputes and contribute to the reduction of litigation costs and the practice of defensive medicine.
• The House Energy and Commerce Committee adopted an amendment to HR 3200, the “America’s Affordable Health Choices Act of 2009,” offered by Representative Bart Gordon (D-TN) that would provide financial incentives to states that enact certificate of merit and/or early offers programs in medical liability cases. The amendment encourages the states to explore alternatives to the costly liability system through reforms that ensure court cases have merit and that allow providers to quickly compensate patients without litigation. This is an important step in the right direction toward reforming our broken liability system, and AMA will continue to work for much needed liability reform.