On Tuesday, I talked about how noneconomic damage caps deny us our constitutional right as members of juries to make socially-contexted judgments about the price of the priceless. However, the other side of the question is: does tort reform work to control costs? If it does, then it may be one of the many circumstances in which we are asked to sacrifice some rights in order to get a social benefit. Namely, we forego the right of a jury trial in order to make health care more affordable for more people.

The argument is that by limiting payouts in medical malpractice lawsuits, doctors will see a reduction in medical malpractice liability costs and therefore more doctors will be able to charge less for their services, reducing the cost of healthcare.

However, this has not proven to be the case. In a survey of national healthcare costs, the Kaiser Family Foundation found that the average cost of an employer-based family health plan had increased by 19 percent in Ohio since the medical malpractice damage caps were put in place, less than the nationwide average of 22 percent. But in contrast, nearby Kentucky, which has enacted no tort reforms, saw an even slower growth in premiums. And, actually, this is a turnaround from the period before Ohio enacted tort reforms, when Kentucky’s insurance costs rose faster than those in Ohio. That’s right, although tort reform, including the cap on noneconomic damages, was supposed to control costs, it actually accelerated them in Ohio.

This is partly because tort reform actually has nothing to do with healthcare costs. A statistical analysis shows no correlation between the cost of medical malpractice insurance premiums and health insurance premiums. Ohio, for example, has the 16th highest medical malpractice insurance premiums, but is blessed with the 8th lowest health insurance premiums. In contrast, Kentucky has the 27th highest medical malpractice insurance premiums, but the fourth lowest health insurance premiums. Florida has the highest medical malpractice insurance premiums (and is considered the US’ number one “Judicial Hellhole”), but is ranked 16th in health insurance premiums. Alaska has the highest health insurance premiums, but is ranked 37th in medical malpractice insurance. In fact, on average, medical malpractice premiums are HIGHER in states that have enacted tort reforms than in states with no reform ($44,799 vs. $43,709).

Although there is no correlation between tort reform and healthcare costs, tort reform is correlated with higher profits for insurance companies. In states with no damage caps, profitability for insurance companies rose by 25% from 2004-2008, but in states with damage caps, profitability rose by 45%.

In other words, with noneconomic damage caps, we have given away the right of an injured person to receive full compensation for their injuries and our constitutional right as citizens to determine the value of those injuries, not for lower healthcare costs, but for insurance company profits.

If you have been hurt by a doctor’s negligence, the medical malpractice lawyers of Robert W. Kerpsack & CO., LPA, will fight for your rights to the full extent allowed by the law. Please call or email us today for a free initial consultation.