Medical Malpractice Payments Do Not Really Have an Effect on Healthcare Costs in the U.S.

May 24, 2013

Medical malpractice payments do not really drive up healthcare costs, says a study conducted by Johns Hopkins. The study released by Johns Hopkins in early May 2013, shows that health care costs only rise about 1% when payouts are made in substantial medical malpractice claims, in the United States.

The study was published in the Journal for Healthcare Quality and it examined payments made in what they describe as “catastrophic medical malpractice claims”. These catastrophic medical malpractice claims involve payments of more than $1 million, which involve patient deaths, birth injuries, and/or other claims for problems that result in the need for lifelong medical care as a result of a medical mistake.

The Johns Hopkins study examined data from 2004 to 2010 and found that catastrophic medical malpractice claim payments totaled $1.4 billion, and it is estimated that the United States healthcare costs are around $2.8 trillion annually, therefore medical malpractice payments don’t really have as high an effect on healthcare costs as is reported by health insurance companies, doctors and other members of the medical field.

Medical malpractice payouts are much lower than is portrayed by tort reform advocates. These people advocate that the high cost of healthcare in the United States can be blamed on medical malpractice lawsuit payouts and the fact that state legislatures have the power to arbitrarily override jury decisions and cap awards, but the Johns Hopkins study shows that it really does not have as high an effect as these advocates make it out to be.

On the contrary, the Johns Hopkins study shows that the cost of actual claims pales in comparison to the cost of defensive medicine, which is unnecessary medical procedures and tests doctors conduct on patients in order to avoid lawsuits in the first place. That cost totaled about $60 billion annually, or about 40 times the cost of actual medical malpractice payouts.

In the date used from 2004 to 2010 for this study, there were a total of 77,621 medical malpractice claims paid. 6,130 of those claims were considered “catastrophic” payouts, therefore; tort reform advocates are wrong when they make the assumption that medical malpractice claims payouts result in $100 million payouts.

The New England Medical Journal, in 2011, published a study that found that only 7.4% of physicians face the risk of medical malpractice claims each year. That means that only one out of every five claims result in a settlement or payout.

Therefore; it is fare to say that far too many tests and procedures are performed annually in the name of defensive medicine, as many physicians dear they could be sued if they don’t order them. It is not the payouts that are bankrupting the system… it’s the fear of them that are.

The Safe Rental Car Act

May 13, 2013

A new bill will be presented named “The Safe Rental Car Act” to the U.S. Senate sometime this year, where it states that Rental car companies are to ground any recalled vehicles within 24 hours of receiving a recall notice from the National Highway Traffic Safety Administration (NHTSA). The time limit is extended to 48 hrs if a rental company has more than 5,000 of the affected vehicles in its fleet. At times, certain recalls provide a list of temporary measures that can be taken until the complete fix is available. If such an option is made available, rental car companies are allowed to continue to rent those recalled vehicles until the replacement parts are available and distributed accordingly.

The bill, if passed, would also give the NHTSA the right to investigate rental car companies’ compliance with the law. Passing the Safe Rental Car Act has its ups and downs, according to rental car companies such as Hertz, Budget, Enterprise, etc. Some rental companies say it’s too hard a law to abide by because depending on the vehicle that is being recalled, rental companies might be forced to ground thousands of vehicles, which would in turn affect the customer, reduce the inventory available at each rental company and any recalled vehicles already out on loan would have to be replaced immediately.

Secondly, some recalls are less serious than others. For example, if a vehicle is being recalled for brake failure or fluid leaks or engine troubles then that recall is important and should be immediately grounded but if the recall is for a proper tire pressure label then that recall is not as important, serious or dangerous to the renter.

Lastly, rental companies, sometimes, point out that taxis do not have to follow the same legislation as rental companies, and to them, that is not fair. They consider taxis as vehicles that take a non-vehicle owner from one place to another and should therefore follow the same legislation, rules and laws as rental car companies in order to maintain the safety of the driver and passenger in these recalled vehicles.

However; if the new bill is passed, it is only for and in the best interest to the public/consumer. When renting vehicles, the rental companies are ultimately taking risks and taking responsibility for the vehicles that they are renting to the public. It is simply one of the risks that come with the rental car business.