The cost of insurance has increased dramatically over the past decade, far surpassing the general rate of inflation in most years. Between 1989 and 1996, the average amount an employee had to contribute for family coverage jumped from $935 to $1778.
In 1990, American companies spent $177 billion on health benefits for workers and their dependents; that number rose to $252 billion by 1996, or more than double the rate of inflation. Among the cost drivers: an aging population – the number of senior citizens who need health benefits is increasing dramatically every year; medical technology advances – which decreased the death rate; new drugs – expensive and effective, which make us live longer; and of course the increase of fear in medical litigations among doctors. Increase in usage will surely increase the cost of health care.
On average, between the ages of 45 and 65, a person’s usage of health care triples. Eighty year-olds use nine times more health care services than 45 year-olds. By the year 2030, the number of people over 65 is expected to double.
The cost for medical services have increased as well. Since 1980, medical cost have risen 281%. The number of organ transplants has doubled in the past 15 years, and all transplants cost over $100,000.From my point of view, I think that increase in medical litigations is one of the most important factor of health care crisis. Americans spend far more per person on the costs of litigation than any other country in the world. The excess of the litigation system are an important contributor to “defensive medicine” – the costly use of medical treatments by a doctor for the purpose of avoiding litigation. As multimillion-dollar jury awards have become more commonplace in recent years, these problems have reached crisis proportions.
Insurance premiums for malpractice are increasing at a rapid rate, particularly in states that have not taken steps to make their legal systems function more predictably and effectively. Doctors are facing much higher costs of insurance.Because the litigation system does not accurately judge whether an error was committed in the course of medical care, physicians adjust their behavior to avoid being sued. A recent survey of physicians revealed that one-third shied away from going into a particular specialty because they feared it would subject them to greater liability exposure. When in practice, they engage in defensive medicine to protect themselves against suit. They perform tests and provide treatments that they would not otherwise perform merely to protect themselves against the risk of possible litigation.
The survey revealed that over 76% are concerned that malpractice litigation has hurt their ability to provide quality care to patients. Because of the resulting legal fear, 79% said that they had ordered more tests than they would, based only on professional judgment of what is medically needed, and 91% have noticed other physicians ordering more tests; 74% have referred patients to specialists more often than they believed was medically necessary; 51% have recommended invasive procedures such as biopsies to confirm diagnoses more often than they believed was medically necessary; and 41% said that they had prescribed more medications, such as antibiotics, than they would based only on their professional judgment, and 73% have noticed other doctors similarly prescribing excessive medications. Every test and every treatment poses a risk to the patient, and takes away funds that could better be used to provide health care to those who need it.
Insurance premiums are largely determined by the expensive litigation system. The malpractice insurance system and the litigation system are inexorably linked. The litigation system is expensive, but, at the same time, it is slow and provides little benefit to patients who are injured by medical error. Its application is unpredictable, largely random, and non-standard. Most victims of medical error do not file a claim – one comprehensive study found that only 1.53% of those who were injured by medical negligence even filed a claim. Most claims, 57% – 70% result in no payment to the patient.
When a patient does decide to go into the litigation system, only a very small number recover anything. One study found that only 8% – 13% of cases filed went to trial; and only 1.2% – 1.9% resulted in a decision for the plaintiff. Although most cases do not actually go to trial, it costs a significant amount of money to defend each claim – an average of $24,669.
The biggest cost, however, is the cost of the few cases that result in huge jury awards. A large proportion of these awards is not to compensate injured patients for their economic losses, such as wage loss, health care costs. Instead, much of the judgment, in some cases, perhaps 50% or more, is for non-economic damages. Awarded on top of compensation for the injured patient’s actual economic loss, non-economic damages are said to be compensation for intangible losses, such as pain and suffering, loss of consortium, loss of the enjoyment of life, and various other theories that are imaginatively created by lawyers to increase the amount awarded. The cost of these awards for non-economic damages is paid by all other Americans through higher health care costs, higher health insurance premiums, higher taxes, reduced access to quality care, and threats to quality of care.The litigation system also imposes large indirect costs on the health care system. Defensive medicine that is caused by unlimited and unpredictable liability awards not only increases patients’ risk but it also adds costs. So how can these problems be solved? The leading study estimates that limiting unreasonable awards for non-economic damages could reduce health care costs by 5-9% without adversely affecting quality of care.
This would save $60-108 billion in health care costs each year. These savings would lower the cost of health insurance and permit an additional 2.4-4.3 million Americans to obtain insurance.The Federal Government also pays for health care, in a number of ways. It provides direct care, for instance, to members of the armed forces, veterans, and patients served by the Indian Health Service. It provides funding for the Medicare and Medicaid programs. It funds Community Health Centers.
It also provides assistance, through the tax system, for workers who obtain insurance through their employment. The direct cost of malpractice coverage and the indirect cost of defensive medicine increases the amount the Federal Government must pay through these various channels, it is estimated, by $28.6 – $47.5 billion per year. If reasonable limits were placed on non-economic damages to reduce defensive medicine, it would reduce the amount of taxpayers’ money the Federal Government spends by $25.3-44.
3 billion per year. This is a very significant amount. It would more than fund a prescription drug benefit for Medicare beneficiaries and help uninsured Americans obtain coverage through a refundable health credit. I am in favor of the plan Universal Health Care Vouchers (UHCV).
It is paid for by a dedicated Value-Added tax of 8%-10%. All insurers would be required to offer a specified health care plan to everyone, with payments adjusted for the risk level of each patient, so that coverage for sicker patients will be reimbursed at a higher rate. Individuals could choose any health care plan they desire, paying for the basic plan with their UHCV, and for any extra services they desire from their own pocket. Over time, this will replace Medicare, as older Americans will simply keep their current voucher plan when they turn 65, and it would replace Medicaid immediately. It would also end the problem of poor people seeking primary care in emergency rooms, by allowing them to have coverage for regular primary care in a doctor’s office. Employers would no longer have to provide insurance coverage, reducing the cost of employment. I am willing to pay higher taxes to solve the health care crisis because I would rather pay a few percent of my salary and have a much better health care insurance for my family than paying $150-$300 every time I go visit the doctor.