Let Me Tell You About A Letter I Received From One Of My Constituents...
There it was towards the end of today's healthcare summit—the perfect illustration of liberal and conservative mindset differences when it comes to crafting solutions to difficult problems. Dick Durbin, the senior senator from Illinois and member of the senate Democrat leadership team was waxing on about why tort reform is so very unnecessary, and more importantly, why it would be unfair to those victimized by medical malpractice.
As politicians are want to do, he used a tragic story to bolster his argument. In this particular instance, he was quarreling with the Republican notion that damage awards for pain and suffering should be capped at $250,000. A badly botched routine medical procedure was used as supporting evidence. The unfortunate victim, while undergoing a standard procedure to remove a mole, had her face badly burned and disfigured when the oxygen she was being given ignited. The woman had to deal with numerous painful surgeries and a life irreparably altered for the worst. Obviously, no rational, caring person could believe that $250,000 is adequate compensation for such suffering.
On the surface, it is difficult to argue with Durbin's reasoning. However, what he doesn't recognize is the dramatic ripple effect on a system that must plan for the possibility of uncapped or virtually uncapped damages to more than just a relative few. It is incumbent upon insurance companies to set premiums, often higher than we'd like, to deal with a lack of cost certainty. It would be fiscally irresponsible (and probably illegal for a public company) to do otherwise. One cannot prudently manage such a business without allocating substantial sums for potentially catastrophic lawsuit awards. Relatedly, medical personnel are forced to practice defensive medicine because they are fearful of crippling lawsuits and the effect such cases will have on their malpractice insurance and overall insurability. Of course, the practice of defensive medicine, irrespective of the existence of actual malpractice, serves to raise premiums even more. A very unvirtuous cycle.
So, in doing what may appear to be sensible and compassionate on the surface (i.e. allowing enormous awards) actually damages the overall system such that orders of magnitude more people are harmed through much higher premiums or lack of access (due to those higher premiums). Would we be better off as a society with lower premiums and broader coverage for all, or virtually unlimited damage awards for the relative few? Is the unfairness to the few trumped by increased fairness to the many?
No doubt reasonable accommodations should be made for malpractice victims, but we simply cannot design policy to address a fraction of one percent of cases, when by doing so, we egregiously impact the other ninety nine plus percent. That is the difficult, but right thing to do.
And, we make these trade-offs all the time.
We set the guilty free on technicalities, as gut-wrenching as it is, because we are concerned that improprieties allowed to go unchecked will have a deleterious effect on our liberty and the integrity of our system of justice.
We could require that cars enable drivers and passengers to withstand head-on collisions at 65 MPH, but have concluded that the economic and societal costs of doing so would be prohibitive.
There are endless examples.
A balance is what we require. As tempting as it is to want to address every bit of current suffering, we have to have an eye toward the longer term, or we're just setting ourselves up for even greater misery down the road.
Common sense and basic economics tell us that the greater cost certainty derived through tort reform, coupled with competition made possible by allowing purchases across state lines is what will control and even reduce premiums. The Democrats' own rhetoric is proof. If insurance company profits are as outrageous as the Dems claim, then there will be a flood of insurer entrants into the marketplace who will want to compete for a piece of the profit pie...once the state monopolies are busted and the threat of exorbitant, unpredictable malpractice awards is mitigated. We know that medical personnel compensation is not the culprit. Salaries are all but stagnant. Nor is it plant or other basic operating expenses. That points the finger squarely at lack of competition and the cost problems associated with defensive medicine.
The market, not the government, is the solution.
Any time you hear a politician, Democrat or Republican, start a sentence with, "Let me tell you about a letter I received from one of my constituents..." cover your ears and hide your wallet.
As politicians are want to do, he used a tragic story to bolster his argument. In this particular instance, he was quarreling with the Republican notion that damage awards for pain and suffering should be capped at $250,000. A badly botched routine medical procedure was used as supporting evidence. The unfortunate victim, while undergoing a standard procedure to remove a mole, had her face badly burned and disfigured when the oxygen she was being given ignited. The woman had to deal with numerous painful surgeries and a life irreparably altered for the worst. Obviously, no rational, caring person could believe that $250,000 is adequate compensation for such suffering.
On the surface, it is difficult to argue with Durbin's reasoning. However, what he doesn't recognize is the dramatic ripple effect on a system that must plan for the possibility of uncapped or virtually uncapped damages to more than just a relative few. It is incumbent upon insurance companies to set premiums, often higher than we'd like, to deal with a lack of cost certainty. It would be fiscally irresponsible (and probably illegal for a public company) to do otherwise. One cannot prudently manage such a business without allocating substantial sums for potentially catastrophic lawsuit awards. Relatedly, medical personnel are forced to practice defensive medicine because they are fearful of crippling lawsuits and the effect such cases will have on their malpractice insurance and overall insurability. Of course, the practice of defensive medicine, irrespective of the existence of actual malpractice, serves to raise premiums even more. A very unvirtuous cycle.
So, in doing what may appear to be sensible and compassionate on the surface (i.e. allowing enormous awards) actually damages the overall system such that orders of magnitude more people are harmed through much higher premiums or lack of access (due to those higher premiums). Would we be better off as a society with lower premiums and broader coverage for all, or virtually unlimited damage awards for the relative few? Is the unfairness to the few trumped by increased fairness to the many?
No doubt reasonable accommodations should be made for malpractice victims, but we simply cannot design policy to address a fraction of one percent of cases, when by doing so, we egregiously impact the other ninety nine plus percent. That is the difficult, but right thing to do.
And, we make these trade-offs all the time.
We set the guilty free on technicalities, as gut-wrenching as it is, because we are concerned that improprieties allowed to go unchecked will have a deleterious effect on our liberty and the integrity of our system of justice.
We could require that cars enable drivers and passengers to withstand head-on collisions at 65 MPH, but have concluded that the economic and societal costs of doing so would be prohibitive.
There are endless examples.
A balance is what we require. As tempting as it is to want to address every bit of current suffering, we have to have an eye toward the longer term, or we're just setting ourselves up for even greater misery down the road.
Common sense and basic economics tell us that the greater cost certainty derived through tort reform, coupled with competition made possible by allowing purchases across state lines is what will control and even reduce premiums. The Democrats' own rhetoric is proof. If insurance company profits are as outrageous as the Dems claim, then there will be a flood of insurer entrants into the marketplace who will want to compete for a piece of the profit pie...once the state monopolies are busted and the threat of exorbitant, unpredictable malpractice awards is mitigated. We know that medical personnel compensation is not the culprit. Salaries are all but stagnant. Nor is it plant or other basic operating expenses. That points the finger squarely at lack of competition and the cost problems associated with defensive medicine.
The market, not the government, is the solution.
Any time you hear a politician, Democrat or Republican, start a sentence with, "Let me tell you about a letter I received from one of my constituents..." cover your ears and hide your wallet.
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