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Comment by Retric | Hacker News Reader

There are basically 4 things driving up medical costs in this country. (Education, Malpractice, R&D, and Insurance) Unfortunately, I don't see any fundamental change happening in any of those areas any time soon. Just think what it would mean if you banned say, advertising the name of any prescription drug to private citizens.

I mean I can understand advertising that there are prescription treatments for ED which hey people might not know about. But, when these things have significant side effects and can't be sold over the counter you need actual medical advice not just people dancing around with smiles on their faces. Not that I think there is a chance in hell of this actually changing, but many country's actually do something like this.

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Malpractice insurance is something like 2% of the overall medical costs in the US, and at least some states have caps on liability lawsuits. Looking now, it seems malpractice insurance premiums have stayed pretty constant over the last couple of years.

Are you sure that malpractice is one of the major factors "driving up medical costs in this country", and if so, do you have a pointer to something which reinforces that statement?

Personally I thought the big increases in liability insurance coverage 5 or so years ago were because the insurance companies were so invested in the market, that after the market crash they needed to hike rates to build back their reserves. Those hikes were then used as justification in advocating liability caps.

It's not a major direct cost, however due to inefficiencies in the system your paying for that 2% in several additional ways. Doctors do a lot of tests to cover their ass. People without insurance tack their get their costs shifted to other people. Then Insurance company's tack on their profit margin above that 2% that's already been compounded a few times. And many of those unnecessary tests can cause further complications down the road due to things like false positives.

I believe that 2% includes defensive medicine. Ahh, here's one of the relevant papers: http://content.healthaffairs.org/content/29/9/1569.abstract

"Overall annual medical liability system costs, including defensive medicine, are estimated to be $55.6 billion in 2008 dollars, or 2.4 percent of total health care spending."

I really don't see 2.4% as one of the major things "driving up medical costs in this country."

Here's another from http://www.factcheck.org/2009/10/malpractice-savings-reconsi... "In an Oct. 9 letter to Republican Sen. Orrin Hatch of Utah, CBO Director Douglas Elmendorf said that a package of changes including limits on malpractice awards 'would reduce total national health care spending by about 0.5 percent (about $11 billion in 2009).'" "That figure includes a 0.2 percent reduction just from lower premiums for malpractice insurance paid by medical professionals. And it includes an additional 0.3 percent in reduced costs of medical tests, imaging and other medical services. "

This would imply that the malpractice overhead isn't more than a couple percent.

Personally, I think the major perception regarding malpractice is based on propaganda by people who want to put caps on all lawsuits. See, of all things, a Cracked article on the major examples of 'outrageous' judgements where the actual facts are at odds with the perceptions: http://www.cracked.com/article_19150_6-famous-frivolous-laws... .

Civil lawsuits are one of the few ways that individuals can take on large companies with bad business practices. Caps mean those companies are more free to make decisions in favor of cost-cutting over quality.

Of course it's hard to justify it that way. It's much easier to say "idiotic medical lawsuits are one of the major reasons for increases in medical costs, so lets cap all lawsuits."

Where do you get your idea that medical malpractice costs are a major contributor to increasing medical costs, either direct or indirect?

Where do you get your idea that medical malpractice costs are a major contributor to increasing medical costs, either direct or indirect? edit: I am not predicting future costs just describing things as they are right now.

I know a few doctors paying well over 100k / year in personal malpractice insurance. Though it looks vary regional. http://www.ama-assn.org/amednews/2003/11/10/prl11110.htm

Obstetrician-gynecologists Florida (Dade County) $201,376 (2002) $249,196(2003) South Dakota $13,325(2002) $14,662(2003)

I agree that on it's own it's not the single top issue. But, don't forget those cost estimates 2.4% get multiplied by all the other inefficiency's in the system. I don't think putting cap's on all lawsuits is the best idea, but neither are lawsuits an efficient processes. Still, if you eliminate 5 different 2 percent inefficiency's your talking about a 10% drop in healthcare spending and around 220 billion dollars a year.

There is no single bullet solution to healthcare. And a lot of people make their living directly from those inefficiency's, but you can't provide everyone the 'perfect' care that everyone seems to expect. Nor does 'perfect' care mean everyone get's to live forever.

Yes, I saw that article as well. It is now 9 years old, and out of date. Quoting from http://www.medscape.com/viewarticle/751009 : "Premiums indeed rose dramatically in the early part of the new century, but in 2011, they declined for the fourth straight year for 3 representative medical specialties, according to a publication called Medical Liability Monitor (MLM). Its annual rate survey, highly regarded in the field, was published this week."

You first said the 2% doesn't include the impact of defensive medicine. I pointed out that it did include defensive medicine, so now you say it's magnified by other inefficiencies in the system. I don't believe you, because your arguments sound very hand-wavy, and don't change in the presence of contrary data. Do you have any evidence to strengthen your statement?

I could be even more hand-wavy and argue that the increase number of medical malpractice payouts is due to the medical system in the US getting worse. As http://content.healthaffairs.org/content/29/9/1565.full points out, "One way to attack the medical liability crisis is to make health care better and safer in the first place" and "Another key to limiting medical malpractice suits is to improve communication with patients immediately after an injury" and "Most health policy experts, he says, believe that “caps on damages [are] tangential to the real problems with the malpractice system, which involve excessive numbers of medical errors, inaccessible compensation for most avoidable injuries, and a slow, expensive process of dispute resolution that is inhumane to both plaintiffs and defendants”."

You pointed out that you know doctors paying over $100K/year in personal malpractice insurance. According to http://content.healthaffairs.org/content/29/9/1585.abstract "We found high levels of malpractice concern among both generalists and specialists in states where objective measures of malpractice risk were low. We also found relatively modest differences in physicians’ concerns across states with and without common tort reforms. These results suggest that many policies aimed at controlling malpractice costs may have a limited effect on physicians’ malpractice concerns." or as stated in http://content.healthaffairs.org/content/29/9/1565.full "Emily Carrier and colleagues find that physicians’ perceptions of the threat of being sued are out of step with their actual risk of being the target of a malpractice lawsuit."

In other words, those doctors might not be needing the $100K+ coverage which they are paying for.

According to http://www.kaiseredu.org/Issue-Modules/US-Health-Care-Costs/... , "health care costs for chronic disease treatment account for over 75% of national health expenditures" and "At least 7% of health care expenditures are estimated to go toward for the administrative costs of government health care programs and the net cost of private insurance."

Those two factors - which you didn't mention in your list of four things affecting the increase in medical rates - are both larger than the 2.4% we're talking about related to malpractice.

2.4% is 20% larger than 2%. That .4% represents something like 8 billion a year which is ya know a lot of money. I have also seen numbers close to 3% from a few sources.

If you want a less hand wavy answer why 2.4 was still to low insurance is inefficient. Here is a link to one company lowering it's rates after the recent change in how inefficient they can be: http://www.ctmirror.org/story/12550/aetna-seeks-cut-health-i... Beginning this year, the federal health reform law requires insurance companies to spend at least 80 percent of the money they collect in premiums on health care costs for individual and small-group plans, and 85 percent for large-group plans. Several company's where over that limit. Anyway, going from the direct cost of 2.4% though an 80% efficient insurance company means .024 / .8 = 3% of someones insurance premiums go to paying that 2.4% direct cost. It's a little worse than that because insurance also requires the provider to create the bill and that time is then indirectly billed back to the insurance company's.

But, still all of this is really nitpickey. It's not really sometime I care about, I just used the word as one of several inefficient part's of the system we have now. I am fine suggesting the dead weight is somewhere between .5% and 3.5% of total healthcare spending, but that's still something like 100,000 or more million dollars every 10 years.

Oh come on, I first said "something like 2%" and after a short bit of research found the number was 2.4%. Not bad for a several year old memory, I think.

Neither you nor I have read that paper which gives the 2.4% value. It may have included the insurance overhead already.

In any case, the health reform law you linked to covers medical insurance for patients, while the 2.4% we're talking about is malpractice insurance for doctors. You can't apply the numbers from one system directly to the other.

The US is the third most populous country. Of course any numbers related to health care are going to be huge. We spend 2.6 trillion or so on health care in a year. You can do as you did and use 100 trillion over 10 years, or you can say that $10 billion per year / population of the US, is $32 per year, or under 0.10 cents per day per person. Note that 2.6 trillion / population of the US => $8,387 per person per year, and 2.4% of that is $201 per person per year or $23 and $0.55 per person per day, respectively.

Quoting again from Wikipedia: "In December 2011, the outgoing Administrator of the Centers for Medicare & Medicaid Services, Dr. Donald Berwick, asserted that 20% to 30% of health care spending is waste. He listed five causes for the waste: (1) overtreatment of patients, (2) the failure to coordinate care, (3) the administrative complexity of the health care system, (4) burdensome rules and (5) fraud."

I do not know if (1) is due to defensive medicine or other reasons. For example, when I broke my toe, I asked for extra x-rays even though it wasn't needed. I know friends who got MRIs even though not essential, because it was included in their insurance plans. Or since the doctor gets reimbursed per test, there's a financial incentive to do more tests (so long as cost less than the reimbursement).

Searching now, I found no useful numbers about the overall cost of defensive medicine. Indeed, it seems to be pretty hard to resolve. I came across the statement that "variation in intensity of treatment from one hospital or city to the next has been well documented among the government's veterans hospitals, where there is no financial or business drive for more rather than less treatment", so it's going to be noisy data.

Doctors do commit malpractice. There has to be some system in place to handle that. Our system now is through the courts. Just how bad are 'frivolous' medical lawsuits?

Let's take http://en.wikipedia.org/wiki/Medical_malpractice#The_case_fo... as the source for numbers. This should be biased for the doctors. The AMA says 60% are dropped without payment and do not go to trial, costing $22,000 in fees. ... Sneaky AMA! Notice that it does not list the percentage of payments made without going to trial. This makes that section unusable for what I was going to do.

I had to go to http://bjs.ojp.usdoj.gov/content/pub/pdf/mmicss04.pdf and find that in the states where payout and lack of payout is required to be reported (ie, Missouri and Maine), some 1/3rd of claims get a payout. Median payout (using Missouri's numbers since they have 8x more reported cases than Maine) is $110,000 for 2,598 cases out of 8,379 total cases. Of these, under 5% are reached by a trial decision.

So, 65% get no payout, and each costs the doctor (using the AMA numbers) $22,000 in legal fees. 30% gets a payout of $110,000 and costs the doctor $22,000 in legal fees, and 5% are reached by trial, of which 90% is found to have no payment (at $110,00) to defend and 10% is found to have a payment of $342,000 and still needs $110,000 to defend. Further, there are about 17,000 cases per year in the US.

Costs because the doctor was actually negligent: (0.30 * (110+22) + 0.05 * 0.1 * (342+110)) * 17000 = $700 million.

Costs because the doctor was incorrectly accused as being negligent: (0.6 * 110 + 0.05 * 0.9 * 110) * 17000 = $1200 million.

Hence, even if you could magically make all frivolous cases disappear, you could only reduce the payouts+legal expenses by 60%, and you almost certainly wouldn't make defensive medicine practices disappear because there will still be court cases, and some rare ones in the $1,000,000+ range.

This is something I'm nitpickey about because I see liability lawsuits as being the only strong tool individuals have against negligent practices. I don't want to see legislative attempts to curtail that power when the underlying justifications are unfounded. From what I can tell, the cost for overtreatment and liability, while large in aggregate numbers, is simply not one of the major reasons for increasing health care costs in the US. Especially since liability rates haven't gone up the last three years.

This is something I'm nitpickey about because I see liability lawsuits as being the only strong tool individuals have against negligent practices.

Ok, I get where your coming from.

The problem I have is lawsuits is they are expensive AND ineffective. So many things have to happen before cutting off the wrong leg actually get's back to those responsible that losing a 2 million dollar gross negligence lawsuit is less meaningful for a doctor than winning the lawsuit and losing their licence. There are some really bad doctors out there, but because there are still insurable because it's fairly random when someone get's sued so it takes a long list of errors before they need to look for other employment. Moving can also help cover someones medical misdeeds.

The simplest way to cut down on medical errors is to limit how long someone can be on call. Life or death decisions at the end of a 12 or sometimes 16 hour day is just insanity. Yet, it's all to common for someone to end up pulling an 18 hour shift.

As to the awards, you can't just take payouts and say this money ends up in the hands of those who where miss treated. Court cases are expensive and it's not uncommon for someone to receive well below 1/2 the stated award after their legal team get's it's cut. It also tends to take a long time.

My suggesting would be a system with automatic and harsher penalty's where people and institutions are penalized for their average mistakes over time not just the occasional one off case they can buy insurance to cover. And where people who have been mistreated can automatically receive reasonable compensation without the protracted legal battle. Unfortunately, I have no idea of how to implement such a system.

PS: Then again, I am not really a doctor either. Just some random nerd who has really enjoyed this disunion on a late Sunday afternoon. I will even say you win the point if it makes you feel any better.

Woo-hoo - I win on the internets! ;)

Yes, that gets back to an issue I highlighted earlier, which is the need to reduce malpractice in the first place. There's a lot of ways to do it. I agree that unfortunately, we've decided that the courts are the right place for feedback.

Doctor review boards, for example, are woefully hesitant to chide doctors who continue to have bad practices. Politicians are equally hesitant to put the nose of "big government" into oversight.

Frankly, one of the reasons I'm in favor of nationalized general health care is that it tightens the feedback between the people who pay for health care and the people who do oversight.

Thanks for the opportunity to do the research on the topic and improve my own understanding.

Your neighbour to the north does this. It leads to vague advertising that tells you about some problem and encourages you to ask your doctor about it. Doesn't seem to have been the end of the world.

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