Another cost to be considered in the access to health care debate along with the huge costs of lifestyle preventable diseases caused by tobacco and other intoxicants, diet, and lack of exercise that I blogged on yesterday, is the costs to the medical system of medical malpractice insurance. The actual costs are hard to come by but are of two types, direct and indirect (indirect costs are the costs of unnecessary tests and treatments ordered by doctors solely to protect themselves from getting sued).
The following is from a Harvard School of Public Health study by Michelle M. Mello, J.D., Ph.D., M.Phil published in 2006:
To calculate the total costs of the malpractice system one would need reliable estimates of both the direct and the indirect costs. The direct costs of malpractice litigation include payments made on claims (from which plaintiff’s attorney fees and costs are taken), legal costs of defending claims and costs of under-writing and administering liability insurance. A recent estimate suggests that claims costs amounted to $4.4 billion in 2001, legal defense costs amounted to $1.4 billion and insurance administration amounted to $700 million. Thus, total direct costs were probably about $6.5 billion in 2001, or 0.46 percent of total health care spending (2). These and all estimates of the costs of the malpractice system, however, are back-of-the-envelope calculations; no hard cost figures are available.
Indirect costs arise when the liability system causes physicians to supply more health care services than they would in the absence of a liability threat. Services that are provided primarily or solely for the purposes of protecting physicians against malpractice liability, rather than the medical benefit of the patient, are referred to as defensive medicine. True defensive-medicine costs are properly counted as indirect costs of the malpractice system, but the costs of additional appropriate (i.e., medically indicated) services should not be included in that estimate. There are no reliable estimates of the national costs of defensive medicine. Many analysts have attempted to estimate these costs; all have failed to do so reliably.