Myth #2: Malpractice Claims Drive Up The Costs of Medical Care.
The costs associated with medical malpractice are a tiny fraction of health care costs. According to the National Association of Insurance Commissioners, the total spent defending claims and compensating victims of medical negligence in 2007 was $7.1 billion—just 0.3% of health care costs. Any restriction on compensation to victims would thus reap a very small savings.
As a result, those focused on limiting patients’ legal rights (insurance companies and medical associations) have turned to the concept of of indirect costs, namely “defensive medicine.” They claim that doctors are frightened into ordering hundreds of billions of dollars worth of unnecessary tests to avoid litigation.
This argument also fails to find facts to support it. First, much of what can be identified as “defensive medicine” is motivated not by liability concerns but by the desire to generate more income. Secondly, the threat of liability may actually improve health care outcomes. Researchers have found that a 10 percent increase in malpractice costs actually reduces mortality by 0.2 percent, leading the researchers to conclude that, “while the mortality benefits of malpractice may be quite modest, these seem more likely than not to justify its direct and indirect health care costs.”