Help Patients & Budget: Replace Georgia’s Broken Medical Tort System – By Ross Mason

January 17, 2013

When the governor paints the state’s financial picture as “daunting” and Medicaid is at least $700 million in the red, you know it’s time to get serious about the state budget.

Such is the task before Gov. Nathan Deal and the Georgia General Assembly when the Legislature convenes in January to adopt a 2014 fiscal plan that not only is in balance but meets all the state’s critical needs.

With less revenue and a lingering recession, the state could reduce its health care costs by more than $700 million annually if it scrapped its broken medical malpractice system and replaced it with a no-blame, administrative compensation system that gives patients more access and allows physicians to focus on reducing medical errors.

The model, the Patients’ Compensation System, will be proposed to lawmakers in Georgia and Florida as a cost-effective remedy to save taxpayers money while encouraging doctors to stop practicing “defensive” medicine: ordering unnecessary tests and procedures that drive up health care costs. That’s because each patient wouldn’t be seen as a potential plaintiff. The system would be organized as a nonprofit with an independent board appointed by elected officials.

A report this summer by BioScience Valuation, a health care economics firm, found that Georgia businesses and families could save at least $8 billion annually if the state replaced the current tort system with the Patients’ Compensation System. Taxpayers would save over $1 billion annually in Medicaid alone, and there would be similar savings for Medicare.

This idea is bold and is likely to put Georgia on the map as a leader in controlling health care costs. But big ideas make some people nervous, so it is important to understand how this no-blame, administrative system would work.

An independent review panel composed of medical experts would decide whether there was avoidable harm to an injured patient. This is the model used by attorneys when their peers review their actions during ethics complaints brought against them before the state bar. If the panel finds a patient to have been truly harmed, the state would award damages based on an approved fee schedule. Funds for damages and the administrative system would be covered by malpractice insurance, and there would be no cost to taxpayers or patients.

The system would result in more payouts to harmed patients; many patients today who are truly harmed are never compensated. Half the nation’s trial lawyers will not take a case without a payout of at least $500,000, according to a recent study by an Emory University scholar. The new payouts would primarily be claims not compensated under the current system. There would also be tremendous savings because there will be a decrease in legal costs as cases no longer go to trial or settlement.

Physicians guilty of gross malpractice could still be sued and reported to the Composite State Board of Medical Examiners. Patient safety would actually increase as doctors feel more secure in sharing their mistakes and learn best practices from colleagues because they would not expose themselves to litigation.

Doctors say a no-blame system is the most attractive tort reform measure to reduce defensive medicine, according to a nationwide physicians’ survey released this month by Jackson Healthcare. In 2010, Gallup found that one in four health care dollars spent nationwide could be attributed to the practice of defensive medicine.

The current system is a failure. It fails to compensate more than 97 percent of individuals who are injured by medical negligence, and the odds are even worse for the poor or elderly. Statistically, you are just as likely to be injured by negligence today as you were 30 years ago. These are dramatic and unacceptable failures!

Georgia can set an example for the rest of the nation by replacing its medical tort system with one that not only will reduce errors and improve access to justice but will create enormous savings for taxpayers and our state budget. That’s a prescription no one should ignore.

Ross Mason is a Senior Fellow at the Georgia Public Policy Foundation, an independent, state-focused think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Mason is the immediate past chairman of the board of the Georgia Department of Community Health. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (December 21, 2012). Reprinted with permission from the Georgia Public Policy Foundation.

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