PUBLIC HEALTH
September 19, 2010

The Price of Malpractice

Researchers calculate that medical malpractice and defensive medicine cost the nation billions of dollars each year.

As healthcare costs continue to soar, a new study outlines just how much we as a nation spend on medical malpractice every year. According to the research from Harvard University, medical malpractice costs us $55 billion each year, which represents about 2.4% of our total healthcare expenses.

The researchers found that defensive medicine accounted for the largest portion — $45 billion — of the total malpractice expense.

In the past, members of congress have argued that addressing medical liability might help rein in rising healthcare costs. The researchers were not certain this alone would help.

Why are medical liability costs so high? First of all, according to the study, doctors are simply charging more for services, in order to "offset rising malpractice insurance premiums." Second, doctors are practicing what’s known as "defensive medicine", which the authors say is "clinicians’ intentional overuse of health services to reduce their liability risk." In other words, doctors are ordering more, perhaps unnecessary, tests simply to cover themselves. The researchers quote President Obama in saying that "defensive medicine may be contributing to unnecessary costs."

The researchers found that defensive medicine accounted for the largest portion — $45 billion — of the total malpractice expense. The rest of the $55 billion was made up by other variables, like indemnity payments, administrative expenses, and lost clinician work time.

The authors suggest that changing health care policy in certain ways may help cut down on medical liability costs: for instance, they call for "[r]eforms to the health care delivery system, such as alterations to the fee-for-service reimbursement system and the incentives it provides for overuse". As more studies like this one reveal the shortcomings of the healthcare system, it will be interesting to see what test programs or changes in policy may follow.

The research was led by Michelle M. Mello, and published in the September 2010 issue of Health Affairs.

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