The Congressional Budget Office (CBO) estimates that the direct costs that providers will incur in 2009 for medical malpractice liability-which consist of malpractice insurance premiums together with settlements, awards and administrative costs not covered by insurance-will total approximately $35 billion. While that may seem like a lot to some, it's actually just a drop in the health care bucket.
In fact, in a letter to Senator Orrin Hatch, the CBO concluded that "if a package of proposals such as those described [in the letter] was enacted, it would reduce total national health care spending by about 0.5 percent (about $11 billion in 2009)."
However, let's look at some of the costs not considered. The CBO does not take into account the costs that the government would have to incur if patients were not compensated for their injuries. For example, if there are no more medical malpractice awards, who will provide for the wives and children who lost their fathers because a doctor was negligent? Who would provide for the patient disabled by a massive heart attack which a negligent doctor failed to diagnose? The government and society would have to pick up the tab.
Fraudulent billing by doctors and hospitals costs much more than medical malpractice liability. The New England Journal of Medicine stated, "In 2008, government-wide 'improper payments' cost the U.S. Treasury $72 billion, or about 4 percent of total outlays for the related programs."
Why then is medical malpractice such a hot issue? Because insurance companies need a villain in the health care debate to draw attention away from their increased profits, failure to reimburse physicians and hospitals fairly, and mistreatment of patients. In summary, Washington has bought the insurance companies’ baloney. Now the American people are being sold a lot of baloney by the insurance companies about tort reform. Don’t buy it.