No wonder health care costs so much

[Nitemare]

Listening to talk radio this morning and they had on a person talking about the health care industry. The typical general practicioner pays out about 10k a year for medical malpractice insurance, while a specialist like a neuro-surgeon will pay between 80-100k a year. Geriatric specialists can't even get insurance in the states that are considered crisis states (18 at the moment).

They blamed this on the insanely large jury awards as well as treatment(pro bono) of uninsured patients....Case in point the person that got hit in the head with the hockey puck, she got a cat scan right away, but still died. Her family is sueing the hospital. while any competent jury(people that are the least informed members of society as they have never read a newspaper or watched a news show and thus have never heard of a trial) will know that it is not the hospitals fault. The hospital still has to tie up resources into representing a defense team to insure their victory...

Premiums are at 1.4 mill in NJ.

 

[tcsenter]

Although huge jury awards are shockingly disproportionate they are also the exception. A more considerable impetus to rising malpractice rates are the multitude of lawsuits which are filed in 'shotgun' like fashion that have little or no chance of winning.

Hospitals and insurance companies find it more cost effective to settle out-of-court at a much lower cost than the hospital and insurance company could defend itself in court and "win". When you can pay someone $15,000 ~ $25,000 to go away, from a purely economic standpoint, its much cheaper and more viable than spending $150,000 ~ $250,000 defending yourself and "winning".

People who like to believe in the fantasy they would never 'settle' if they were in-the-right because its a matter of principle have quite frankly never been sued once, let alone dozens or hundreds of times. I always ask those people, "How much principle can you afford, because principle is going to cost you through the nose whether or not you win your case."

This racket isn't even particularly limited to medical malpractice. In fact, its standard practice throughout the entire legal profession. An utterly incompetent attorney can make a living in personal injury/civil liability. A good attorney can make a fortune.

Your auto and home insurance companies face the same legal tactics every day of the year. Its simply cheaper to settle, even when from a legal standpoint, the plaintiff's case is on thin ice and the likelihood is that they would lose.

That's not to say that whopping judgements aren't the "Golden Goose" to every personal injury/civil liability law firm in the whole of the United States.

Dozens of law firms have specialized in systematically suing big tobacco and gun manufacturers for years, filing thousands of lawsuits, hopping from jurisdiction to jurisdiction, looking for that one sympathetic judge and jury pool, without a single win to their credit until very recently. That one multi-billion dollar judgement makes a hundred small settlements all worth while...and then some.

The $4 billion judgement against General Motors because they didn't make the Malibu strong enough to withstand an 80MPH rear impact from a drunk driver without risking a fuel tank rupture is particularly instructive. How many $25,000 'go-away' settlements would you have to pay-out to equal $4 billion? A sh-tload.

 

[BaliBabyDoc]

The majority of states have NOT seen a net increase in cases over the past five years. But average awards have increased dramatically primarily due to big settlements (I'm talking medmal only). So jury awards do indeed affect premiums but it is far from the primary reason premiums have increased so quickly. Depending on the state some premiums were artificially low as providers competed for market share (similar to the activity of health insurance providers) . . . during boom economic times the companies did not suffer b/c premiums did not have to match outlays. But health care inflation (cost of technology, drugs, etc) has grown tremendously, the population continues to age hence accessing care more often (and more expensive), and the market took a nosedive. All of these forces have rippled through the system making care more expensive.

Many medmal providers have shifted their systems of coverage. Some use occurence coverage while others use continuity (I may be off on this b/c this system is such BS it's hard to comprehend). Occurence (I think) is coverage for when an alleged event takes place while Continuity (I think) is for when a claim is filed. Many providers now use Occurence which means doctors that change positions must buy their own "tail coverage" to take care of claims which might arise from past events.

Regardless, if state legs, Congress, and Bush would focus on real reform; Medmal costs could be easily reduced.
1) Develop federal rules for medmal providers.
2) Cap noneconomic damages at 500K.
3) No cap on cost of continuous care.
4) Awards should be provided in installments so insurance companies can reasonably judge their actual yearly costs.
5) Contingency fees on settlements should be capped at 10% of the 1st 100K and then 5% up to the 500K cap.
6) If cases go to trial contingency fees double and are always added to jury verdict (noneconomic damages).
7) Every state's insurance agency should add Medmal to its stable of regulated industries.
8) Hospitals should be compelled to modify systems of care which have endemic features leading to increased patient morbidity/mortality . . . I hate to say it but EVERY hospital has systems of care which are inherently dangerous. For one reason (money) or another (lack of concern) these systems remain in place.

When it comes to the rising costs of healthcare, Medmal is no better than 4th behind the cost of technology, cost of medication, and . . . damn it escapes the mind. Now litigation is indeed a cost in the system which diverts resources from the provision of care . . . but our entire system of insurance does exactly the same and at a much greater cost.

 

[Tom]

"2) Cap noneconomic damages at 500K."

Way too low.

"Now litigation is indeed a cost in the system which diverts resources from the provision of care . . . but our entire system of insurance does exactly the same and at a much greater cost. "

I agree. But I don't like the idea of solving one without solving the other. One premise for not going to a government healthcare plan is the notion that the private industry can do it better. I think this is wrong, but as long as we are going to have a private system on the front end then we ought to keep it that way on the other end too, which means people who are harmed have a full right to recover their damages based on the determination of a jury.

In other words if the healthcare industry wants protection from the legal system, they need to give up some of their rights to function as private companies. Healthcare insurance industry should be completely eliminated, all it does is add a layer of cost and keep lots of people from getting healthcare. Pretty stupid idea.

 

[Zebo]

Originally posted by: BaliBabyDoc
The majority of states have NOT seen a net increase in cases over the past five years. But average awards have increased dramatically primarily due to big settlements (I'm talking medmal only). So jury awards do indeed affect premiums but it is far from the primary reason premiums have increased so quickly. Depending on the state some premiums were artificially low as providers competed for market share (similar to the activity of health insurance providers) . . . during boom economic times the companies did not suffer b/c premiums did not have to match outlays. But health care inflation (cost of technology, drugs, etc) has grown tremendously, the population continues to age hence accessing care more often (and more expensive), and the market took a nosedive. All of these forces have rippled through the system making care more expensive.

Many medmal providers have shifted their systems of coverage. Some use occurence coverage while others use continuity (I may be off on this b/c this system is such BS it's hard to comprehend). Occurence (I think) is coverage for when an alleged event takes place while Continuity (I think) is for when a claim is filed. Many providers now use Occurence which means doctors that change positions must buy their own "tail coverage" to take care of claims which might arise from past events.

Regardless, if state legs, Congress, and Bush would focus on real reform; Medmal costs could be easily reduced.
1) Develop federal rules for medmal providers.
2) Cap noneconomic damages at 500K.
3) No cap on cost of continuous care.
4) Awards should be provided in installments so insurance companies can reasonably judge their actual yearly costs.
5) Contingency fees on settlements should be capped at 10% of the 1st 100K and then 5% up to the 500K cap.
6) If cases go to trial contingency fees double and are always added to jury verdict (noneconomic damages).
7) Every state's insurance agency should add Medmal to its stable of regulated industries.
8) Hospitals should be compelled to modify systems of care which have endemic features leading to increased patient morbidity/mortality . . . I hate to say it but EVERY hospital has systems of care which are inherently dangerous. For one reason (money) or another (lack of concern) these systems remain in place.

When it comes to the rising costs of healthcare, Medmal is no better than 4th behind the cost of technology, cost of medication, and . . . damn it escapes the mind. Now litigation is indeed a cost in the system which diverts resources from the provision of care . . . but our entire system of insurance does exactly the same and at a much greater cost.

Way to complicated and also allows companies and individuals to make a calculated risk analysis when making harmful desions.

Simple: loser pays all legal fees.

 

[BaliBabyDoc]

"2) Cap noneconomic damages at 500K."

Way too low.

Well, maybe . . . the point is an injured party will NEVER pay for healthcare that's even remotely related to their claim. Assuming they cannot work they will get disbursements of say 50K a year for a decade while paying no taxes on it. Yeah it sux for someone earning much more but the majority of Americans make less than 50K. If you earn more than 50K you should have enough sense to buy supplemental insurance anyway.

Healthcare insurance industry should be completely eliminated, all it does is add a layer of cost and keep lots of people from getting healthcare.

Well duh . . . but what elected official would dare stand up to Aetna. I doubt Frist would support it because it would wipe out the family fortune in ColumbiaHCA.

Way to complicated and also allows companies and individuals to make a calculated risk analysis when making harmful desions.

These companies would not exist if somebody wasn't counting the beans in risk analysis. In medicine (those providing care), it's always odds. A tiny fraction of people with headaches get CT scans or MRIs b/c it is a horrible waste of resources and is often non-diagnostic. Of course if you are really worried about say a subarachnoid hemorrhage a spinal tap is cheap and with a high degree of sensitivity for detection. Better training of physicians reduces costs and risks but I doubt you will hear the AMA, hospitals, or equipment manufacturers talk about it.

 

[Zebo]

These companies would not exist if somebody wasn't counting the beans in risk analysis

How do they do this Dr. Bali without one important variable, punitive damages? I'm not just talking about medical care either all facets of liabilities risk analysis is best guess work without this variable and I think protects the public against erregous violations. When they have this variable all the guess work is gone and they can truley be protected against thier decisions.

 

[sandorski]

Lawsuits and what not are a major problem, but the cost of drugs themselves are also a problem within the US. Another problem is the layers of bureacracy. Most Socialized Western healthcare systems have eliminated all 3 of these problems.

 

[BaliBabyDoc]

How do they do this Dr. Bali without one important variable, punitive damages? I'm not just talking about medical care either all facets of liabilities risk analysis is best guess work without this variable and I think protects the public against erregous violations. When they have this variable all the guess work is gone and they can truley be protected against thier decisions.

It has typically been irrelevant b/c there are relatively few companies that just sell Medmal . . . most companies sell all kinds of policies. They take the premiums and invest the money which typically produces tidy returns. Even when claims are increasing . . . these companies make money by having a regular (and short) pay cycle (they expect you to pay premiums at a set interval and typically apply penalties or cancel if you are late) while they employ various mechanisms to delay payment of their own debts/liabilities.

Liability risk (and premiums) are marginally calculated by tallying costs over an interval (say 5-10 yrs) while assuming a certain rate of return on investments over the same interval. Typically this would lead to moderate year over year increases. But if you follow the history of Medmal you will find that insurance companies have periodic episodes of rapidly rising rates . . . curiously they coincide with economic downturns. This last period has been particularly notable b/c many firms lowered rates in the 90s to compete for marketshare and the economy was booming. In keeping with the boom times, settlements/jury awards have grown exceedingly fast as well. The bottom simultaneously fell out of the stock market. Some Medmal providers went bankrupt due to these rapid changes. The remaining Medmal providers jacked up prices b/c 1) they must to stay in business, 2) who is going to stop them, and 3) no competition.

 

[LunarRay]

A compensation/rehabilitation scheme enacted by the various legislatures similar in scope and purpose to Workers Compensation is the answer to all the nightmares within the HC industry with an independent oversight organization to insure the facilities and personnel, techniques and technology meet some agreed standard.
If a patient sustains a tort or even a criminal event the remedy would be sought through this scheme. If the patient died as a result the dependent spouse and/or children would be compensated for their loss based on the scheme schedule.
The cost of such a scheme would be based on the loss ratio of the physician or hospital or both. Just as is the case in WC. The "windfall" to the patient or his next of kin would cease. Fair and equitable would replace outrageous.
The process of becomming a physcian is long and hard and geared to equip the physician with the requisite qualifications necessary to effectively diagnose and treat. No two are equal to this task but, the process seeks to narrow the gap. Physicians, for the most part, are among the brightest folks in our population and are armed with a hate for disease and pain. We must enable them to function without fear of personal financial loss or worse.
When a passing physician does not render assistance to an unknow person for fear of a law suit we have established the value of life to be relative to the risk the physician is willing to assume. This is incredible.

 

[przero]

I find it humorous that in the sidebar on the left of this page are ads for malpractice attorneys. I would think that if in ATOT there was a thread about how to treat an injury and someone made a suggestion that was followed and it lead to complications, those very same attorneys would include Anand in their suit.