Medical Liability Costs Make Up 2.4% of U.S. Health Spending

Medical malpractice and guarding against suits cost the U.S. about $55.6 billion annually, or 2.4 percent of the total health-care bill, according to Harvard University’s Atul Gawande and co-authors.

The yearly price of so-called defensive medicine -- tests, visits and procedures performed to reduce litigation risk -- is about $45.6 billion, the authors said today in the journal Health Affairs, in a report using 2008 dollars. That’s the biggest part of the malpractice bill, which also includes clinicians’ time spent defending suits, and price increases to cover the cost of liability insurance.

While “not trivial,” the amount for malpractice is less than “some imaginative estimates put forward in the health reform debate,” the researchers wrote. During their lawmaking, members of Congress suggested that limiting suits against doctors and hospitals would cut health-care costs, and President Barack Obama authorized pilot projects to investigate the effects of defensive medicine, the authors said.

“The $56 billion for medical malpractice isn’t chump change for a country already feeling financially strapped,” said Amitabh Chandra, a co-author, in a telephone interview yesterday. “But we should not think that by reforming it, we will find the keys to reducing the cost growth in health care.”

Constraining medical malpractice isn’t the “silver bullet,” said Chandra, an economist and professor of public policy at Harvard’s John F. Kennedy School of Government, in Cambridge, Massachusetts.

“The president and Congress have many levers they can pull to try to cut health-care growth,” he said. “Malpractice is one of them, but you’re not going to get that much out of it.”

The authors concluded that policymakers could achieve more progress by changing health-care delivery and payment, such as the fee-for-service system doctors use to charge patients for each service and visit, Chandra said.

Gawande is an associate professor of surgery at Harvard Medical School in Boston, a contributor to the New Yorker magazine and an author whose books include “The Checklist Manifesto: How to Get Things Right” (Metropolitan Books, 2009). He was a health-care adviser in the administration of then- President Bill Clinton.

Chandra and Gawande wrote the analysis along with Michelle Mello, a professor of law and public health at Harvard’s School of Public Health, and David Studdert, a professor at the University of Melbourne’s School of Law and School of Population Health.

To contact the reporter on this story: Pat Wechsler in New York at pwechsler@bloomberg.net.

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