By Tom Curry National affairs writer
updated 10/9/2009 10:42:38 AM ET 2009-10-09T14:42:38

Claim: Limiting medical liability lawsuits could save billions of dollars in health care costs.

Doctors must buy insurance and practice defensive medicine (ordering more tests) to protect against the risk of having to pay huge malpractice claims. According to the Congressional Budget Office, obstetricians' annual malpractice premiums exceed $100,000 in some states. A new radio ad aired by the U.S. Chamber of Commerce claims that curbing malpractice lawsuits "could save $120 billion in health care costs, but the trial lawyers want to keep it out of health care reform." The Chamber's source for that statistic: a 2003 report by the Department of Health and Human Services. That report in turn cited a 1996 academic study which estimated that limits on non-economic (pain and suffering) damages could cut health care costs by as much as 9 percent. How big are the potential savings from limiting such suits?

Fact or fiction?
Fact. Health care costs could be saved by limiting liability lawsuits, but the size of the savings is in dispute. In a new analysis released on Oct. 9, the Congressional Budget Office concluded that limits on liability lawsuits would cut national health care spending by 0.5 percent. That works out to be about $11 billion a year in savings, CBO said. The report also said that recent research indicates that tort reform would curb defensive medicine and thus cut medical spending. The resulting reduction in outlays on Medicare, Medicaid, and other federal programs: roughly $41 billion over 10 years.

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