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Malpractice Costs Less than 2.5% of National Health Care Tab
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MedpageToday.com REPORTS HERE that "costs associated with medical malpractice added about $55.6 billion to the nation's total health care costs in 2008 -- roughly 2.4% of a more than $2.3-trillion tab -- and most of that money went to pay for tests, procedures, and treatments associated with defensive medicine, according to an analysis by Harvard researchers."  The authors note "it represents a small fraction of total health care spending. Yet in absolute dollars, the amount is not trivial."

"A second paper...analyzed the costs of defensive medicine across 35 medical specialties and concluded that 'defensive medicine practices exist and are widespread, but their impact on medical costs is small.' So small, they wrote, that tort reform changes that would reduce medical malpractice premiums by 10% would only reduce the nation's total medical costs by 0.120% to 0.134%."

The article reports that "taken together, the papers suggest that promoting tort reform as a means to control health care costs is a straw man, and their conclusions run contrary to the figures cited by supporters of tort reform."

Authors "broke down the costs of malpractice this way:
  • Indemnity payments: $5.72 billion, of which $3.15 billion represents payment for economic damages, $2.4 billion for noneconomic damages, and $0.17 billion for punitive damages.
  • Administrative expenses: $4.13 billion, which includes $1.09 billion in fees to defense attorneys and $3.04 billion in overhead expenses. (Estimated fees to plaintiffs' attorneys were $2 billion, but that amount is included in indemnity payments.)
  • Defensive medicine costs: $45.59 billion, of which $38.79 billion was estimated as the costs of hospital services and $6.80 billion as physician services."

"Another $0.20 billion was added to the estimate to cover other costs, including lost physician work time -- the authors estimated that physicians lose 2.7 to 5 working days for each malpractice suit -- and the cost of "reputational and or emotional harm" to the defendant physician."

 
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U.S. government overpaid private insurance companies administering Medicare Advantage plans by as much as $3.1 billion in 2010, according to a new report from the Government Accountability Office (GAO).

About a quarter of all Medicare beneficiaries are enrolled in Medicare Advantage plans, and the Centers for Medicare and Medicaid Services (CMS) paid about $114 billion to the plans in 2010.


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