Monday, February 21, 2005

We now have a new law that restricts class action lawsuits, further limiting the rights of people to be compensated for their injuries. The Houston Chronicle, in our president's back yard, is critical of the legislation. The Chronicle's point: what happened to the concepts of limiting federal power, espoused by the republicans? Good question. My answer is that the Republicans never really believed that stuff; they say whaever they need to in advancing ther own agenda. Thus, if it serves their purpose to say "get government out of peoples' lives," they take that tack. When they want something in line witht their iedologu, all of a sudden restrictive legislation that takes perennially state matters out the states' hands becomes perfectly acceptable. Logically inconsistent, but ideologically useful.

Now that class actions are out of the way, it's back to this ridiculous effort to limit, first medical malpractice lawsuits, and ultimately all lawsuits for damages. Here are some interesting truths demonstrating that caps on damages and other limitations as proposed by the Administration do not reduce healthcare costs. Read the whole report, but here are some bullet points:
Despite caps on damages enacted in 19 states, most insurers continued to increase premiums for doctors at a rapid pace, regardless of caps.

States with caps on damages have premiums on average 9.8% higher that states that do not have caps.

Past and present medical malpractice judgments/settlements do not seem to be the driving force behind increases in premiums.

California doctors' premiums rose 450% in the 13 years after passage of caps on damages, and did not go down until California passed, by referendum, insurance reform.

The state of Texas's passed caps on damages in 2003. Its second largest insurer has now requested a 19% increase in premiums, stating that caps do not lead to any significant savings.

Modern Physician: "The real drivers of the rise in premiums over the past four years have been low interest rates, a sour national economy and the legacy of overly aggressive pricing policies in the years before the ‘crisis’ began in late 2000. . . ."

Many of those who support medical malpractice caps – even many tort reform “experts” and insurance company executives, admit that caps will not significantly lower premiums.

The Congressional Budget Office (CBO) reported that caps will not significantly reduce overall healthcare costs.

Even the Budget Submitted by the Bush Administration – the Administration’s FY ’05 Budget did not state any savings as a result of caps.

"Insurance was cheaper in the 1990s because insurance companies knew that they could take a doctor's premium and invest it, and $50,000 would be worth $200,000 five years later when the claim came in. An insurance company today can't do that." (Victor Schwartz, general counsel to the American Tort Reform Association, "Dose of Legality," Honolulu Star-Bulletin, April 20, 2003).

The number of physicians has risen in every state every year over the last 3 years (of available data – 2000–2002), and the numbers of physicians are higher in every state than they were in 1996. (American Medical Association, “Physician Characteristics and Distribution in the U.S.,” 2003-2004 edition)

In studies done in 1995 and 2004, the median plaintiff award in tort cases has dropped from $50,000 in the 1990s to $37,000 by 2001. (; University of Chicago Law Review, Winter 1998). Between 1992 and 2001 the number of jury trials with punitive damages remained stable (4% to 6%) and the median punitive damage award decreased slightly from $63,000 to $50,000. (Civil Trial Cases and Verdicts in Large Counties, 2001, Thomas H. Cohen, Steven K. Smith, Bureau of Justice Statistics, 2004).

The General Counsel for the American Tort Reform Association (ATRA) – admitted that so-called “frivolous” malpractice cases are “very rare.”

In August 2003, tort reform advocates, including insurance industry executives, were forced to admit their arguments lacked merit after they were placed under oath by the Florida Senate Judiciary Committee. The St. Petersburg Times reported: “The Senate Judiciary Committee, frustrated by the conflicting information given it by different interest groups, discredited much of the medical malpractice rhetoric by placing witnesses under oath. Suddenly, there were no frivolous lawsuits and
Florida was a profitable place for insurance companies to do business after all.” (St. Petersburg Times, 8/17/03)

The bottom line is that this whole "reform" effort is nothing more than a shell game by Big Insurance and the chambers of commerce, in the hopes that a not-well-understood issue slides past the public's eye. It's much harder to undo something that has already been done. Which is exactly what they're trying to do.

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