Believe it or not, California could make a meaningful contribution to the national quest to bring down health care costs.
How so? California could point out that it has MICRA, and that has helped tether medical costs in the state.
MICRA stands for the Medical Injury Compensation Reform Act. It was passed in 1975 amid a crisis marked by 300 percent increases in medical malpractice insurance premiums. Some doctors were defecting to other states back then.
MICRA stabilized the situation and brought down costs, so much so that several other states have adopted their own version of MICRA. A few holiday seasons ago, a doctor wrote in a trade journal that of all things to be thankful for, “No. 1 on this list for California physicians is MICRA.”
The act limits attorneys’ contingency fees. Oh, to be sure, trial lawyers still can get very big payoffs when they prevail in some medical malpractice lawsuit. But they no longer enjoy the equivalent of winning the lottery. That means trial lawyers are less likely to file frivolous medical malpractice suits by the wheelbarrow load.
However, MICRA’s most important feature is something else: It limits so-called pain-and-suffering damage awards to $250,000 in malpractice lawsuits.
Don’t read that wrong. Plaintiffs suffering from medical malpractice can still get millions of dollars to cover their lost wages, medical expenses and long-term care. In fact, plaintiffs can get an unlimited amount of money for their economic damage. Only the non-economic damages – pain and suffering – is capped. That’s important because that’s where medical malpractice awards got crazy. (Think millions of dollars for spilled hot coffee.)
As a result, medical liability insurance premiums got sane in California. That’s been the case elsewhere: After Texas passed its version of MICRA a few years ago, malpractice premiums dropped 42 percent.
Here’s an illustration according to a group called Californians Allied for Patient Protection, which is supported by a bunch of medical associations with the aim of protecting MICRA: Malpractice insurance for an obstetrician-gynecologist (a high-risk practice) is about $214,900 in Florida’s Dade County. But it’s only $89,950 in Los Angeles and Orange counties.
Do the math. If you’re an ob-gyn in Florida and you deliver 100 babies a year (two a week), your insurance premium figures out to $2,150 per baby. In Los Angeles, it’s $900 per baby. That’s savings enough to start a college fund, no?
But all that is only part of MICRA’s magic. The other part: It cuts down on defensive medicine. In other words, since doctors here know they are not as likely to get frivolous suits for medical malpractice, they are far less likely to order unnecessary tests and duplicative procedures.
Consider this: The Massachusetts Medical Society last November released a first-of-its-kind survey in which 83 percent of physicians reported practicing defensive medicine. All manner of tests, procedures, referrals and consultations – and 13 percent of hospitalizations – were ordered not for medical reasons but just so they can say on a witness stand that, yes, they ordered this test, and yes, they ordered that hospitalization.
Anyway, a lot of expensive and medically unnecessary (not to mention painfully invasive) stuff nationwide would get eliminated by MICRA or some version of it.
Would MICRA be a magic prescription to stop the spiral of health care costs nationwide? Nope. Would it help? Yep. Will it get serious consideration in Washington? Well…
The problem is, the Democratic Party is pretty much a wholly owned subsidiary of trial lawyers. And since MICRA hurts trial lawyers, it’s hard to see Democrats supporting it.
Bad politics, after all, trumps good sense.
Charles Crumpley is editor of the Business Journal. He can be reached at firstname.lastname@example.org.
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