By David Arkush
Arguing with the likes of the Manhattan Institute about medical malpractice litigation isn’t much fun anymore. We’ve proved them wrong time and again, and it looks like they’re running out of gas. The Manhattan Institute’s latest piece misrepresents our analysis and accuses us of an odd mistake: responding to arguments about medical malpractice litigation in the terms in which they are made.
A little history: For years, enemies of the courts – doctors, liability insurance companies, and groups like the Manhattan Institute – have argued that a torrent of frivolous lawsuits against doctors have been driving up the costs of medical care. As everyone knows, medical costs have skyrocketed, with yearly spending increasing from $1.2 trillion to $2.5 trillion in the last ten years alone. The dream of these court deformers was to pin with the problem on lawsuits. But the math just doesn’t work. We’ve shown year after year that medical liability, even generously defined, is a tiny fraction of overall health care costs. Currently it’s at historic lows – just 0.58 percent of health care costs – while those costs are still skyrocketing.
With the evidence overwhelmingly against them, many deformers have changed the subject. They talk about so-called “defensive medicine,” which has extremely little empirical support – meaning that they can fabricate numbers at will. But the Manhattan Institute just won’t give up. They are trying to push back on the evidence, and their tactic is to accuse us of cooking the numbers.
They say we look only at doctor payouts, which are an underestimate of medical litigation costs. But in reality, we look at total premiums paid to liability insurers, which are an overestimate. So we are doing the deformers a favor, hedging to their benefit, in large part to avoid any accusation that we are cooking the numbers. But that doesn’t stop them from accusing.
More bizarre is that they accuse us of using the wrong denominator (total health costs) for our numerator (medical malpractice suits):
Trial lawyer lobby groups—the American Association for Justice and its assorted allies like Public Citizen and the Center for Justice and Democracy—regularly argue that litigation is an insignificant contributor to health care cost escalation because it only accounts for a tiny fraction of health costs. In making this argument, such organizations play the “denominator game”: the tiny fraction they point to takes the total $2.2 trillion in U.S. health expenditures as its denominator and an absurdly narrow definition of health-care litigation as its numerator.
What’s wrong with this? We are responding to the tort deformers’ argument that medical malpractice suits are driving up the overall costs of care. The deformers are accusing us of wrongdoing because we respond to an argument that deformers make, on the terms they make it. Really rich.
Oh, and there’s one more problem: The Manhattan Institute itself commits the same purported mistake. It disparages President Obama’s proposal on malpractice liability pilot programs because they are too small a fraction of – you guessed it – overall health care costs. These folks talk so fast they can’t keep up with their own nonsense.
David Arkush is the director of Public Citizen’s Congress Watch division.
citizenvox.wordpress.com 
You are correct that malpractice payouts are a tiny proportion of total medical costs.
It also should be noted that in most states more than half of the total dollars paid out for malpractice since national records have been kept by the NPDB have been paid out for the malpractice of only about two percent of physicians. Quite often these two percent have multiple malpractice payments in their records and also quite often they have had no action taken to restrict their ability to practice or revoke their licenses.
If state licensing boards and hospital peer reviewers did their jobs, we could substantially reduce malpractice payouts — and more importantly reduce malpractice itself — while maintaining the rights of injured patients to be compensated.
Physicians and insurance companies have focused on limiting their liability rather than limiting malpractice itself. They need to reconsider their priorities.