The Democrats' Hypocrisy on Malpractice Caps

The Democrats may support cap-and-trade legislation but aren't as consistent when it comes to the idea of medical malpractice caps on punitive damages.

On the two most pressing Obama legislative ambitions (energy and healthcare), one word, common to both debates, should be emphasized in the upcoming healthcare debate:  CAPS.  Generally-speaking, opponents of cap-and-trade legislation tend to like the idea of medical malpractice caps for punitive payouts – and vice versa. The strategic reason that Republicans should make a fuss over “med mal” caps ties directly to the reason Democrats oppose them. Caps on medical malpractice punitive damages prevent payouts above certain levels for pain and suffering (usually several hundred thousand dollars).  For obvious reasons, plaintiffs’ attorneys do not like the idea of capping the damages that drive paydays. Caps exist in a number of states, and a growing body of data exists on what the effect of caps has been on medical liability losses, premiums, and physician presence, for example, in states with caps versus states without them.  Anyone who understands economics or insurance companies could guess that states without caps have higher medical liability losses; one might also guess that states without caps would have higher liability insurance premiums.  But here the data are not crystal clear. There does seem to be a strong negative relationship between the existence of caps and premium growth rate (see, for example a good AMA study here), but that does not mean that states with caps have seen premiums decline.  And since doctors can move freely, states without caps tend to have a predictably lower number of physicians (vide Mississippi’s shortage of doctors, lack of a cap and strong trial bar presence). Democrats love to point out that medical malpractice payouts and premiums constitute roughly one percent of total healthcare costs.  The argument must be that a one percent constituent part could not cause a disproportionate impact on the whole (a curious argument for those who believe strongly in deleterious effects of carbon dioxide, 0.03% of the atmosphere). The argument against the one percent trope is that insurance premiums cause inefficient and unnecessary testing (“defensive medicine”) so that physicians can defend themselves in the event of a trial.  As the database grows, one suspects the natural intuitive impact of caps will become more empirically obvious. In the meantime, the unending support that Democrats enjoy from the American trial bar should make the one percent argument uncomfortable to trumpet.