In their frantic attempt to put an end to Nevada’s malpractice insurance crisis, our state politicians are looking for solutions in all the wrong places.
It is popular to blame greedy insurance companies, ambulance-chasing lawyers, runaway juries and incompetent doctors. Certainly they have all helped make the crisis worse. But the root of the problem is that malpractice insurance is a matter of politics, when it should be a matter of consumer choice.
At its heart, the issue centers on risk. When a doctor advises or performs a medical procedure on a patient, the patient is taking the risk that the doctor’s advice is incorrect, the medical procedure is not appropriate for the patient’s condition, or the doctor will perform the procedure incorrectly. The doctor, in turn, is taking a risk that the patient will be unhappy with the outcome and will initiate a lawsuit.
Under our current system, a patient typically has the unrestricted right to sue his or her doctor for a large amount of money. To protect himself, the doctor attempts to limit this risk in a variety of ways. In addition to purchasing expensive malpractice insurance, a doctor can reduce his exposure to lawsuits by performing redundant and unnecessary diagnostic tests. He can further cut his risk by offering only “mainstream” medical advice and procedures, even when he knows that other treatments would be more appropriate.
For the patient, this leads to inferior medical service at a high price. For patients without insurance or other resources, the outcome is often worse: waiting for hours in an overcrowded emergency room, or doing without medical care altogether.
Putting a cap on malpractice awards may temporarily ease the crisis, but it will not solve the underlying problem. The solution lies not in government cost controls, but in adopting an insurance model that will give doctors and patients more choice in how they define the terms of their relationship.
When a consumer buys a used car, he has the option of purchasing an extended warranty. He can either take the risk of paying for repairs if the car breaks down, or transfer that risk to another party by paying for the warranty.
In the doctor-patient relationship, no such choice exists. The patient, in effect, is forced to purchase an “extended warranty” on the doctor’s services, whether he wants it or not, and whether he can afford it or not. Those who can’t afford it are forced to seek inferior medical attention elsewhere, or do without.
If a “consumer choice” system were implemented, patients would be able to select their individual level of malpractice protection, based on their personal preferences and economic circumstances. Such protection could range from a “bare-bones” policy covering only medical costs to “deluxe” coverage offering high limits for pain and suffering.
By allowing doctors to set fees based on their level of legal liability, such a system would not only make medical care more affordable for low-income and uninsured patients, but would introduce some much-needed price competition into the medical profession.
A “consumer choice” model of malpractice insurance would create numerous secondary benefits. Insurance companies could offer dramatically lower premiums for patients willing to accept low-limit malpractice coverage. Such cost reductions would make employers more willing to continue offering health insurance benefits to their employees. Medicare and Medicaid patients would have an easier time finding doctors willing to treat them. The level of medical litigation would be reduced, easing the strain on our overburdened judicial system. And with doctor visits more affordable, the number of non-emergency visits to emergency rooms would be reduced.
Most importantly, such a reform would greatly enhance the doctor-patient relationship. Patients would have the ability to select a level of malpractice protection appropriate to their desires and circumstances. Doctors would have less incentive to treat patients as potential adversaries. Therefore, they would have less reason to perform unnecessary diagnostic procedures to protect themselves from lawsuits. And doctors would be freer to recommend innovative, rather than conventional, medical treatments in cases where they consider such treatments appropriate for the patient.
There are no perfect solutions to the current malpractice insurance crisis. No matter what laws are in effect, a certain number of patients and doctors will still wind up in court, and the outcome will not always be fair. But compared to the current state of affairs, a system that allows more consumer choice will be better for doctors, better for patients, and better for the long-term health of medical care in Nevada.
Charles Barr lives in Las Vegas and has an M.A. in economics from the University of Nevada, Las Vegas. He is a policy fellow with the Nevada Policy Research Institute.