Group: TX health system worse after liability caps

A new report from Public Citizen claims that the imposition of medical liability caps in Texas in 2003 has not reduced medical costs or curbed the ordering of expensive diagnostic tests, and instead, healthcare is less available and has become more expensive compared to national averages.

The report, "A failed experiment: health care in Texas has worsened in key respects since state instituted liability caps in 2003," analyzes the costs and availability of healthcare since Texas imposed a $250,000 cap on the amount of non-economic damages that injured patients could recover from negligent doctors. Since the cap was implemented, malpractice litigation in the Lone Star state has plummeted dramatically, but Medicare spending has soared, says Taylor Lincoln, research director of Public Citizen's Congress Watch division and author of the report.

Lincoln says this finding contradicts the "defensive medicine" theory, which holds that fear of litigation is to blame for stark increases healthcare costs. Since the caps were instituted in Texas, health insurance costs have outpaced the national average, and the percentage of residents lacking health insurance has risen, he says. (The full report is available free at http://www.citizen.org/a-failed-experiment-report.)

"Despite the sales campaign to promote Texas as an exhibit of the merits of limiting doctors' liability for mistakes, the real world data tell the opposite story," Lincoln says. "Healthcare in Texas has become more expensive and less accessible since the state's malpractice caps took effect."

The findings of the report were disputed by Jon Opelt, executive director of the Texas Alliance for Patient Access, which supported the 2003 liability caps. Opelt released a statement saying that lowering the cost of healthcare was never the purpose of the tort reform law. Rather, it was intended to improve access to care and has been successful in that regard, he says.

The caps have kept payouts lower. The number of payments made on behalf of Texas doctors to compensate patients for medical errors fell more than 50% between 2003 and 2010, and the value of those payments fell by nearly 65%, without adjusting for inflation. But insurance companies have cut doctors' malpractice insurance premiums more slowly.

The report cites these changes since Texas instituted its liability limits:

• Per-enrollee Medicare spending in Texas has risen 13% faster than the national average.

• Medicare spending specifically for outpatient services in Texas has risen 30.7% faster than the national average.

• Medicare diagnostic testing expenditures in Texas have risen 25.6% faster than the national average.

• Premiums for private health insurance in Texas have risen faster (51.7%) than the national average (50%).

• The percentage of Texans who lack health insurance has risen to 24.6.

• The per capita increase in the number of doctors practicing in Texas has slowed to less than half its rate in the years leading up to the caps.