A study in the September issue of Health Affairs has pegged the cost of malpractice at approximately $55.6 billion a year, or 2.4 percent of annual healthcare spending.
Michelle Mello, lead study author and professor of law and public health at the Harvard School of Public Health, and her colleagues at Harvard and Brigham and Women's Hospital in Boston analyzed various components of the medical liability system, including payments made to malpractice plaintiffs, defensive medicine costs, administrative costs – such as attorneys' fees – and the costs of lost clinician work time.
"Physician and insurer groups like to collapse all conversations about cost growth in healthcare to malpractice reform, while their opponents trivialize the role of defensive medicine," said Amitabh Chandra, study author and professor of public policy at Harvard's Kennedy School of Government. "Our study demonstrates that both these simplifications are wrong – the amount of defensive medicine is not trivial, but it's unlikely to be a source of significant savings."
The study found that defensive medicine costs alone were estimated at $45.6 billion per year. The researchers did not assess social costs such as the cost to a physician's reputation and emotional costs for physicians being sued.
The study's authors concluded that tort reforms, such as a cap on non-economic damages, may reduce liability costs but are likely to have little impact on overall healthcare spending. Other reform proposals, such as moving away from fee-for-service reimbursement, may have a greater effect, they said.
"We cannot debate the potential for medical liability reform to bring down healthcare costs in any meaningful way without realistic cost estimates," Mello said. "Some of the numbers bandied about in policy discussions were quite imaginative, and we wanted a more defensible estimate."
According to the American Medical Association, average defense costs per malpractice claim range from a low of about $22,000 among claims that are dropped or dismissed to a high of more than $100,000 for cases that go to trial.
"Even though the vast majority of claims are dropped or decided in favor of physicians, the understandable fear of meritless lawsuits can influence what specialty of medicine physicians practice, where they practice and when they retire," said the AMA's immediate past-president, J. James Rohack, MD.
He said the AMA supports "proven medical liability reforms" to lower healthcare costs and keep physicians caring for patients.