CBO Says Tort Reform Would Bring $54 Billion in Savings

By Lori Montgomery
Washington Post Staff Writer
Saturday, October 10, 2009

Congressional budget analysts said Friday that lawmakers could save as much as $54 billion over the next decade by imposing an array of new limits on medical malpractice lawsuits -- 10 times more than previously estimated.

New research shows that legal reforms would not only lower malpractice insurance premiums for medical providers, but also would spur providers to save money by ordering fewer tests and procedures aimed primarily at defending their decisions in court, Douglas W. Elmendorf, director of the nonpartisan Congressional Budget Office, wrote in a letter to Sen. Orrin G. Hatch (R-Utah).

The CBO report lends credence to Republican arguments that substantive limits on malpractice lawsuits will reduce health-care costs. However, President Obama opposes one of the chief proposed changes the CBO studied, caps on jury awards, and analysts give the measures little chance of passage.

"These numbers show that this problem deserves more than lip service from policy-makers," Hatch said in a statement. "Unfortunately, up to now, that has been all the President and his Democratic allies in Congress have been willing to provide."

The letter comes in response to questions Hatch raised during the Senate Finance Committee's recent debate over health-care reform.

Elmendorf wrote that newly available research prompted CBO to update "its analysis of the effects of tort reform." The agency's conclusion: A package of reforms that included a $250,000 cap on damages for pain and suffering and a $500,000 cap on punitive damages "would reduce total national health care spending by about 0.5 percent."

The federal government would reap a substantial portion of those savings, the CBO said, primarily through reduced Medicare costs.

© 2009 The Washington Post Company