Dick Cheney, Insurance Salesman

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Center for American Progress

Speaking at the Medical College of Ohio (http://www.washingtonpost.com/ac2/wp-dyn/A62877-2004Jul19?language=printer) in Toledo yesterday, Vice President Cheney called for a cap on medical malpractice awards. But instead of shilling for the insurance industry, Cheney’s time would have been better spent in Ohio reviewing this fact sheet on malpractice (http://www.uhcanohio.org/reports/fact_malprac.html) from the Ohio Universal Health Care Network. As it documents, the “solution” proposed by the White House is really designed to take the heat off the insurance industry that is fueling the problem, and bankrolling the Bush campaign (http://www.opensecrets.org/industries/indus.asp?Ind=F09). As other studies document, malpractice caps do little — if anything — to reduce doctors’ and patients’ insurance rates. Insurance industry simply pocket any money saved. One recent study by the Congressional Budget Office (http://www.cbo.gov/showdoc.cfm?index=4968&sequence=0) found that the benefits of capping malpractice would be “weak” and “inconclusive.” Meanwhile, such reforms would “undermine incentives for safety,” (http://www.cbo.gov/showdoc.cfm?index=4968&sequence=0) while making it “harder for some patients with legitimate but difficult claims to find legal representation.”

NO LINK BETWEEN CAPS AND PREMIUMS: Vice President Cheney would have Americans believe there is a direct link between the insurance premiums doctors pay and rising health-care costs. Not so. Last year, Weiss Ratings, Inc., an independent financial services analysis company, issued a comprehensive study(http://www.weissratings.com/News/Ins_General/20030602pc.htm) showing that in 19 states with malpractice caps, physicians suffered a 48.2 percent jump in their premiums. Meanwhile, in 32 states without caps, premiums rose by only 35.9 percent. In other words, there is no connection between caps and premium rates. Instead, the premium problem comes from insurance industry pricing practices (http://www.chron.com/cs/CDA/printstory.mpl/front/2067895) that gouge doctors. While malpractice payouts actually went down by 8.2 percent between 2001 and 2002, there was no corresponding decrease in doctors’ premiums (http://www.dmregister.com/opinion/stories/c2125555/21716886.html), meaning the insurance industry pocketed the difference.  The Des Moines Register points out, “There’s simply no correlation between lawsuits and insurance rates (http://www.dmregister.com/opinion/stories/c2125555/21716886.html). Rather, insurance rates are tied to the climate of the stock and bond market, where insurance companies invest much of their money.”

CALIFORNIA CASE STUDY: The state of California put medical malpractice caps in place in 1975. A 1993 study of medical malpractice insurance in California showed the caps had “done little more than enrich California malpractice insurers with excessive profits (http://www.consumerwatchdog.org/insurance/fs/fs002695.php3), at the expense of malpractice victims.” According to a study released in California yesterday, damage caps now come at the expense of the most gravely injured (http://www.latimes.com/business/la-fi-malpractice13jul13,1,7501163.story).

GETTING WHAT IT PAID FOR: Why won’t President Bush and Vice President Cheney address the real issue of insurance reform?  The insurance industry has paid a pretty penny to protect its interests. Since 2000, the industry has donated over $67 million (http://www.opensecrets.org/industries/indus.asp?Ind=F09) to President Bush and his allies in Congress, twice as much as they’ve contributed on the other side of the aisle.

CBO PUTS IT IN PERSPECTIVE: The Congressional Budget Office (CBO) this year found that “even large savings in premiums can have only a small direct impact on health care spending — private or governmental–because malpractice costs account for less than 2% (http://www.cbo.gov/showdoc.cfm?index=4968&sequence=0) of that spending.” In fact, an analysis by the CBO shows capping Medicare malpractice would benefit physicians and doctors, but would reduce private health insurance premiums a measly 0.4 percent (http://www.washingtonpost.com/wp-dyn/articles/A62877-2004Jul19.html). Want proof? According to the CBO, there is “no statistically significant difference (http://www.cbo.gov/showdoc.cfm?index=4968&sequence=0) in per capita health care spending between states with and without limits on malpractice torts.”

DEFENSIVE MEDICINE DEFENSE: The White House blames an increase in health care costs on the defensive medicine doctors practice. It’s a strategy, the administration says, doctors employ to protect themselves from lawsuits. Not so, said the CBO report. Instead, ordering more expensive tests “may be motivated less by liability (http://www.cbo.gov/showdoc.cfm?index=4968&sequence=0) concerns than by the income it generates for physicians.”

DOCTORS NOT DRIVEN OUT: The administration has often claimed that recovery caps were also necessary because “lawsuits are driving docs out of the practice, which means there’s less availability”(http://www.whitehouse.gov/news/releases/2004/01/20040126-3.html). While there are isolated markets with problems, a report by the General Accountability Office found that nationally, “reductions in supply by health care providers could not be substantiated (http://www.cbo.gov/showdoc.cfm?index=4968&sequence=0) or did not widely affect access to health care.” In fact, in Pennsylvania and West Virginia — two of the 19 states supposedly in a “full-blown liability crisis,” the number of doctors per capita has actually gone up (http://www.washingtonpost.com/ac2/wp-dyn/A15752-2003Sep15?language=printer) over the past six years, according to the GAO. Bob Herbert of The New York Times took a look last month at how the Bush administration is cooking up the myth of a crisis (http://www.azmedassn.org/articles/2004_06_25-3.htm).

Consumer Watchdog
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