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Bush: "I'm here to talk about how we need to fix a broken medical liability system."

President Bush's 43-minute speech in Madison County yesterday called for a medical liability bill to be passed this year, and added calls for class action reform and asbestos reform. White House policy advisor Kristen Silverberg answered questions about medical liability reform. The problem has only grown worse since HHS issued a 2003 report calling for systematic reform, with potential savings to the federal government of $28-$50 billion a year, and to the economy of much more. Legislation has not been introduced yet, but it will likely be similar to last term's H.R. 5, The HEALTH Act of 2003.

Naturally, the American Trial Lawyers Association is up in arms to protect the billions they take from the status quo. They've published a "fact sheet" aimed at the arguments Bush made in his speech; at least one legislator, Rep. Jan Schakowsky, has already parroted it word for word on her web site. Par for the course, ATLA resorts to quote-mining because it can't win the debate on the facts.

ATLA argues that, contrary to the evidence and experience, doctors are not leaving Illinois: �There are 9,000 more doctors licensed to practice medicine in Illinois than there were a decade ago, up roughly 30 percent.�

It's telling that ATLA relies on the number of doctors licensed to make their case. According to the Federation of State Medical Boards, 60% of physicians have licenses in more than one state. Indeed, according to the AMA, over 20% of the doctors licensed in Illinois live out of state. Simply nose-counting licenses ignores this fact, ignores that thousands of licensed physicians are retired or otherwise don't maintain active practices, ignores the thousands of licensed physicians who have chosen to limit their practices to avoid potential liability. Even the Chicago Tribune article cited by ATLA acknowledges that a survey of obstetricians in Illinois showed that 11% of them had stopped delivering babies between 2002 and 2004; the article also noted that Will County's only neurosurgeon has ceased brain surgery, meaning there's no one within a two-hour drive of a local car accident to perform such critical work. Yet this article is the best evidence ATLA has that there is no crisis. Doctors know differently: more than half of the physicians in Madison and St. Clair Counties were sued for malpractice between 2000 and 2003.

ATLA's fact sheet also distorts the record by relying on a nose-count of "verdicts" rather than expenses from malpractice claims. Yes, there have been very few "verdicts" in Madison County; but the issue is the amount that insurers pay out in settlements. ISMIE--the leading physician-owned and governed medical malpractice mutual insurance company in Illinois--reports that the average indemnity payment to plaintiffs made in 2003 was $590,000, up 25% since 2001. The number of medical liability claims reported to ISMIE has increased 45% from 2001 to 2003.

ATLA blames ISMIE's executive pay for the gigantic malpractice insurance increases. Not so. If ISMIE were to reduce its administrative expenses to zero and refunded all of its workers salaries and associated expenses to its clients, it would reduce premiums only 12%. And less than 4% of ISMIE's investment holdings are in the stock market. In 2003, medical malpractice insurers nationwide paid $1.375 in defense costs and payouts for every $1.00 of premiums they took in.

ATLA repeats the discredited claim that caps don't reduce insurance rates, claiming to be supported by figures from the Medical Liability Monitor; as we discussed in September, Medical Liability Monitor called this manipulation of their data "misleading." Congressional testimony submitted by the American Academy of Actuaries, still unrefuted by ATLA and its supporters, demonstrates conclusively that caps reduce malpractice insurance rates. The experience in Texas, which recently added caps to its state constitution, bears this out: the largest insurer, the Texas Medical Liability Trust, cut rates 17 percent within fifteen months of the passage of caps.

Finally, ATLA continues to insist that only 2% of medical costs can be attributed to malpractice liability insurance. Aside from ignoring the costs incurred by the hospitals and doctors who self-insure, this ignores the effect of defensive medicine: unnecessary tests and procedures undertaken to avoid second-guessing after the fact. (The official statement of ATLA's president distorts the number even further, calling it 0.5%, when even ATLA's fact sheet acknowledges it's 2%.) How is it that ATLA simultaneously claims that its power to sue doctors has no effect on the willingness of doctors to order tests while arguing that unlimited non-economic damages are necessary to deter doctors from committing malpractice?

Will Congress stand with the American people, or will a minority squelch necessary reform on behalf of the most powerful special interest lobby in America? Ask your senators.



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.