Shirley Svorny's paper for Cato arguing that caps on medical malpractice damages hurt consumers got a lot of attention. I found the paper very disappointing, however: it cherry-picked studies and ignored real-world practices by largely assuming away the problem. As such, it was not just contrarian, but counterproductive.
Virtually everything in the paper is premised on the idea that there's no haphazard aspect to medical malpractice liability: "Researchers have found that awards are not haphazard. The medical malpractice system generally awards damages to victims of negligence and fails to reward meritless claims." That adverb "generally" covers a lot of room, however, and is too thin a reed to sustain Svorny's first sentence, much less eventual conclusions. Svorny's paper engages in a non sequitur: Svorny correctly refutes the idea that the malpractice system is completely haphazard, but she then proceeds under the presumption that the system is therefore not at all haphazard. This fails to consider the ramifications of the intermediate case. A hypothetical judicial system that gets it right 60% of the time, for example, "generally awards damages to victims of negligence and fails to reward meritless claims," as Svorny correctly states the status quo does. But that 40% error rate would still be the sort of haphazard results that call for a policy response. We don't see an error rate of 40% today. But we do see one large enough that we need to consider alternatives to an unfettered liability regime.
Svorny, for example, trumpets the success of insurers working with anesthesiologists to reduce medical error. But she takes the wrong lesson from that experience. Anesthesiologists improved their safety record considerably, reducing patient deaths an astounding 97% over twenty years, thanks to adoption of some basic scientific techniques in a practice that was previously more of an art form. That wiped out their medical liability problem, right? Wrong: anesthesiologist malpractice insurance costs have dipped only 37% in real dollars. I seem to be the only one who's noticed this disconnect, but it sure indicates a lot of haphazardness to me. Anesthesiologists are unique in the medical profession: they were unnecessarily killing scores of patients in the twentieth century. I'm not aware of any other branches of medicine that would benefit to the same extent that anesthesiology did, but the anesthesiologist experience doesn't suggest that a comprehensive insurance effort to reduce medical injuries ten percent would have much of an effect on malpractice costs, given that anesthesiologists reduced their problems thirty fold, but couldn't even halve their malpractice costs.
Svorny ignores other evidence of haphazardness. In nursing homes, for example, objective measures of quality have only a slight inverse relationship to litigation expenses: moving from the lowest-performing decile to the top decile reduces the chances of being sued from 47% to 40%. Another study found "no rational link between the tort system and the reduction of adverse events." Morris et al., "Surgical Adverse Events, Risk Management, and Malpractice Outcome: Morbidity and Mortality Review Is Not Enough," Annals of Surgery 237, no. 6 (June 2003): 844-852. The Harvard Study found that, holding severity of injury constant, the litigation system was just as likely to award damages in a case where no medical malpractice has taken place as one where medical malpractice has taken place; indeed, the sued non-negligent doctors paid more on average to injured patients than the sued negligent doctors, and the majority of patients receiving compensation weren't injured by negligence. Brennan et al., "Relation between Negligent Adverse Events and the Outcomes of Medical-Malpractice Litigation," 335 NEJM 1963 (Dec. 26, 1996). The statistics were somewhat better in a larger study done a decade later, but far from evidence of lack of haphazardness: 40% of malpractice lawsuits are meritless, and 28% of meritless claims receive compensation.
No one is contending that medical malpractice awards are entirely random. But they don't need to be entirely haphazard to be creating more costs than they are resolving. Svorny assumes that because she has rebutted the strawman, she can base the rest of her argument on the premise that the underlying system works. And certainly, it would be true that if the system were working (or if legal errors were considerably more rare than medical errors), caps would be counterproductive. But Svorny can be correct that the system "generally" works (in the weak sense that it does outperform a coin-toss in assigning liability) while being incorrect about the conclusions she draws from that. I'll discuss that more later in the week.
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