CNNFN-TV MARKET CALL

RHONDA SCHAFFLER, CNNfn ANCHOR, MARKET CALL: Healthcare reform is a hot-button issue today inside the Beltway. President Bush and lawmakers on Capitol Hill are confronting the soaring costs of medical malpractice insurance. Some physicians say skyrocketing premiums are driving them out of practice. Medical Correspondent Elizabeth Cohen join us now with a closer look.

ELIZABETH COHEN, CNNfn MEDICAL CORRESPONDENT, MARKET CALL: Rhonda, good morning. This morning the president spoke to the American Medical Association on the subject of what to do about doctor shortages in some part of the country. Shortages that the president says is due to skyrocketing premiums for medical malpractice insurance. He mentioned serving examples of how these shortages have really caused problems for patients. Here is an example of one of them.

(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There’s a story about the lady — and this happens all of the time — in Nevada, named Ruth Valentine. She’s pregnant. She called more than 50 local doctors and she couldn’t find anybody in Nevada to serve her. So she went to Utah where she is staying with friends until she has her baby.

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COHEN: But the other side says, why should victims of medical errors have to suffer even more by not getting money from juries? That’s what the president want to do. He wants to put a cap on how much money victims can get. But victims say that they have suffered enough.

Today, in front of Congress, a woman named Sherry Keller testified about what happened to her.

(BEGIN VIDEOTAPE)

SHERRY KELLER, MEDICAL ERROR VICTIM: I had gone into shock, lost consciousness, and fell from the bed, hitting my head on the way down. C-2 through C-7 spinal cord injury. Quite similar to that of actor Christopher Reeve’s or that that killed Dale Earnhardt.

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COHEN: Sherry Keller says that she went in for a hysterectomy and ended up in a wheelchair because of a doctor’s error. Now, let’s take a look at medical malpractice premiums and how much they’ve gone up. We were specifically looking at OB-GYNs, because they are in a
particular difficult situation. Premiums for them went up nationally in 20 percent in the year 2002. In South Florida, where the rates are particularly high, some obstetricians pay up to $210,000 per year.

Let’s take a look at jury awards. The median malpractice awards have gone way up over the years. In 1994 the median was $362,500. In the year 2000, that median was $1 million. What President Bush wants to do is he wants to put a $250,000 cap on pain and suffering, when people sue doctors. And a $250,000 cap on punitive damages.

Now, as we discussed, victims of medical errors think this is a terrible idea. They say the president ought to be going after the insurance industry. They say that if the insurance industry is overcharging doctors on their premiums and that’s what is making the doctors move out of town or stop practicing. Rhonda?

SCHAFFLER: Elizabeth Cohen, thanks so much. Elizabeth raises all of the issues now we are going to tackle them in our “Tough Call”: Should there be a cap on medical malpractice awards? Our guests today are Jamie Court, executive director of the Foundation for Taxpayer &
Consumer Rights, a group that is against proposed insurance reform, and Nancy Udell, director of policy at The Common Good, a bipartisan initiative to overhaul what it calls America’s lawsuit culture. Good to have you both here.

JAMIE COURT, TAXPAYER & CONSUMER RIGHTS: Hello.

NANCY UDELL, THE COMMON GOOD: Hello, Rhonda.

SCHAFFLER: Nancy, let me start with you, and you can explain lawsuit culture. What are you talking about?

UDELL: Rhonda, the irony is the current system, which is supposed to be helping consumers, is actually hurting them. There is people who are injured by medical injury do not get compensated, the vast majority, through the current tort system. And The Common Good is focused on broader reform, in looking at a whole new system of medical justice that would actually be reliable and reach reliable decisions that would good for patients and good for doctors and good for consumers.

SCHAFFLER: Jamie, what do you think?

COURT: Well, first of all, we are for insurance reform. This is an insurance reform problem. This a problem caused by a downturn in Wall Street. And that’s where insurance companies have lost a lot of income. And now they are trying to make it up by raising premiums. In California, we have actually had insurance reform in effect since 1988, and it has delivered huge savings to all lines of insurance, including malpractice reform. But if you are going to take the rights of innocent victims to hold a wrongdoer accountable in court, you are going to have a problem, because — For instance, in this case of Jesica Santillan, the heart-lung transplant victim, she would be able to recover no more than $250,000 in her case because she doesn’t have wage loss and she doesn’t have medical bills. And if she had a cap on damages, she very likely would not be able to find an attorney because out of that award, would have to come attorney’s fees, court costs and expert
witness fees. So, it is not fair to take this out on the victims when it’s an insurance problem and an insurance company problem.

SCHAFFLER: Nancy, it’s hard, too, when you start talking about putting a price on human life and then caveats. A lot of people have to get paid after that. How in the world is this going to be balanced? What’s the order of day that Washington faces in trying to fix this?

UDELL: Well, Rhonda, the Duke situation is obviously a tragic one. We don’t believe that the current medical malpractice litigation system did anything to prevent Duke from happening. In fact, it probably helped Duke to happen because the current culture of blame and shame inhibits systems changes that could prevent things like Duke from happening. We believe we need a system that focuses on the right incentives for organizations like Duke, which is not a bad hospital. It’s a good hospital, those are good doctors, to be able to practice in an environment in which they can focus on right kinds safety improvements that are good for patients. And the
current malpractice litigation system simply doesn’t do that. It’s bad for patients. It’s very random. Only one in 100 recovers anything, half of what they recover goes to lawyers and it simply isn’t good for the average American. Healthcare costs are going through the roof. Doctors are spending $100 billion on defensive medicine. And we have 41 million people uninsured. That is not good for consumers. We think we need an entirely new system of medical justice.

SCHAFFLER: Jamie, can we take California system and apply it nationally?

COURT: Well, unfortunately, we’ve had two systems. One is a system of damage caps and that unfortunately has encouraged the growth of HMO medicine and recklessness. That started in ’76. And from ’76 to ’88, malpractice premiums here went up 190 percent. So, it didn’t hold down insurance premiums. When California voters went to the ballot box and said we have to regulate
insurance premiums, give the state an opportunity to approve or deny rates, end the anti-trust exemption for the insurance industry in the state, stop price fixing, that resulted in savings. So, that premiums between 1988 and 2001 were about even. Premium volume didn’t grow. So I think if you take insurance regulation, that is the answer, but just by limiting victims rights to get recovery you are not going to bring down insurance premiums, because what happened in California was there were legitimate claims that couldn’t get filed, people couldn’t get attorneys. But what happened was insurers — until they were compelled by regulation — never returned the savings to doctors. They had to be forced to. And that is the way unfortunately insurance companies act. And the reality is malpractice costs are half of 1 percent of all healthcare costs. This won’t bring down healthcare costs. I would rather see a system where good doctors pay less, doctors will with claims against them pay more. We don’t have experience rating and we should have a larger risk pool so OB-GYNs aren’t all isolated in paying these huge premiums. What should happen is the risk should be spread over all doctors and premiums will come down for those people who are targeted in high risk specialties.

SCHAFFLER: Nancy, let’s take this back to Washington. What’s the chance that a year from now the three of us won’t be having the same conversation?

UDELL: Well, Rhonda, we really hope that isn’t what is going to happen. We are very excited about the momentum that is happening now, and think this is a very, very good time for real reform. We have specialized tribunals that make decisions in all kinds of cases. We have tax courts. We have customs courts. We have courts for doing patent appeals. We have immigration courts. There is no reason why these kinds of very real issues like, 98,000 people dying in hospitals every year from medical errors. Why those kinds of cases can’t be before a more accessible to patients, tribunal that has knowledge and can make decisions on a going forward basis. We really think we need to look at broader reform than caps. While caps may keep premiums down they don’t solve the problem of patient safety. And there is a big movement behind this. And we’re very excited about the possibility for broader reform.

SCHAFFLER: Nancy Udell, of the Common Good, Jamie Court, Foundation for Taxpayer & Consumer Rights, thanks for joining me as we make the “Tough Call” on medical malpractice. It is a difficult one. Thanks.

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