Debt Reduction Supercommittee Should Ignore CBOs Guesswork on Tort Reform

The AMA and other medical groups have advised the Joint Congressional Committee on Deficit Reduction (the “supercommittee”) that federally imposed limits on lawsuits over medical malpractice could save as much as $62 billion over ten years, citing the estimate provided last year by the Congressional Budget Office. Besides the fact that such limits are unconstitutional, but there are multiple deficiencies in the CBO estimate and reasons for the supercommittee to ignore that estimate.

First, as I wrote here on January 6, “The Congressional Budget Office has a long, inglorious history of large-scale, massive errors in its scoring of budget proposals.” As economist Alan Reynolds warned years ago, the CBO not only has a lousy record of estimating ten-year budget deficits and projections of policy impacts, but it’s missed often on just year-to-year projections. It’s no wonder that House Majority Leader Eric Cantor accused the CBO of outright “budget gimmickry” in its calculations last year on the supposed “savings” that would result from ObamaCare, or that Cantor and House Speaker John Boehner criticized CBO for predicting that repealing ObamaCare would cost $145 billion.

Second, as attorney Brett Emison points out, CBO admitted last year that it did not “consider the effect of tort reform on patient health and medical outcomes. Remarkably, the CBO determined that ‘many studies of malpractice costs do not examine health outcomes.'” As I wrote on January 14, implementing CBO’s projection of “savings” of $54 billion could actually result in more deaths and injuries. CBO admitted in its estimate that limits on medmal lawsuits could “an additional 4,853 Americans killed every year by medical malpractice, or 48,250 Americans over the ten-year period CBO examines.” And another 400,000 or more patients could be injured during the same 10 years.

Third, the CBO can’t estimate the impact that sweeping limits on medmal lawsuits would have on federal health care costs paid for by Medicare, Medicaid, and the Veterans Administration. If someone is brain-damaged, mutilated or rendered paraplegic as a result of medical negligence, but cannot obtain compensation from the culpable party through the tort system, he or she may be forced to turn to those programs for compensation. None of these increased Medicaid or VA hospital costs are considered in the CBO estimate. Whenever there is a successful medical malpractice lawsuit involving an elderly or poor person, Medicare and Medicaid can claim either an interest in whatever the patient recovers, so the victim reimburses the government for some of the health care expenditures. Without the lawsuit, Medicare and Medicaid will lose funds that the government would otherwise be able to recoup. And none of these lost funds are considered by the CBO.

Fourth, CBO guesstimated that imposing federal lawsuit limits would result in a reduction in a drop in liability insurance premiums, but provided no raw data, explanations, or sources to back up its estimate. Numerous states have already imposed caps on medmal lawsuit damages, with no impact on personal health insurance premiums. CBO makes the same assumption that ObamaCare proponents made, that Uncle Sam can wave a wand and magically force health insurance premiums to drop. How’s that one working out for us?

Anyone betting on federal lawsuit limits to balance the budget is wasting their time. Not only is it unconstitutional, but it won’t raise real money and solve our budget problems.