Tort Reform is Healthcare Reform

Exhibit A for the argument that we can’t reform healthcare without also reforming the legal system. Read the whole WSJ piece, it’s eye opening.

Politicians talk about healthcare reform almost exclusively from the payer side, as in forcing everyone to have insurance and the government establishing an entitlement program or expanding an existing one to cover those who can’t pay. Fine but this does not do anything to lower the cost of providing healthcare in a private system and I dread a system like the NHS where administrators can talk freely about rationing healthcare based on lifestyle and deciding what procedures are available and what are not.

Putting price controls in place to determine pharmaceuticals, either by fiat or through artificial market mechanism is not going to create structural healthcare reform either. At any rate, I would still end up paying $25 for a couple of aspirin the next time I’m in the hospital so we should be looking broadly at this problem.

Sadly, my observation that there is a direct correlation between the comprehensiveness of a proposed solution from Congress and the probability that they will end up creating a bigger problem than the one they are trying to solve is still in effect…. as evidenced by the 2005 Energy Bill that ended up driving up commodity food prices and a host of other unintended consequences.

In 2003 and in 2005, Texas enacted a series of reforms to the state’s civil justice system. They are stunning in their success. Texas Medical Liability Trust, one of the largest malpractice insurance companies in the state, has slashed its premiums by 35%, saving doctors some $217 million over four years. There is also a competitive malpractice insurance industry in Texas, with over 30 companies competing for business. This is driving rates down.

The result is an influx of doctors so great that recently the State Board of Medical Examiners couldn’t process all the new medical-license applications quickly enough. The board faced a backlog of 3,000 applications. To handle the extra workload, the legislature rushed through an emergency appropriation last year.

[From Cross Country –]