Subject: Re: Canadian Health Care System a Failure? (WSJ article)
Newsgroups: talk.politics.medicine,talk.politics.misc,alt.politics.usa.misc,soc.culture.canada

In article <[email-masked]> [email-masked] (Gary L Dare) writes:
>markp@vostok (Mark Pundurs) writes:
>
>>>Of course not ... you guys need extra MRI's for the lawyers. (-;
>>
>>Somebody in t.p.m (Doug Fierro?) was poo-poohing the idea that 
>>litigiuosness had much to do with high US health care spending.
>>Do you disagree with him?
>
>That depends where you draw the analysis.  In the spring, there was a
>small piece in the NYT that holds Doug's sources citing litigation
>awards as less than 1% of total costs (or was that annual increases?).
>That is actually pretty poor for all the speculative litigation that
>must be going on 

  No, that 1% is a U.S. Department of Health and Human Services statistic
that estimates the TOTAL cost of malpractice, not just litigation awards.
Litigation awards are not directly accounted for in the US health care
bill anyways- it is indirectly accounted for in malpractice insurance
premiums.

  It's still something to be concerned with- 1% of the US Health Care
is rapidly approaching $1 billion.  I never said that we do not need
tort reform, it's just that when analyzing the US health care bill,
malpractice costs- direct and indirect-  are a very small percentage
of the total bill (which I will show with numbers provided below).

>... on the other hand David Nye, MD and other
>practicioners with net access have presented that fear of litigation
>has modified medical treatment approaches.  That's not the actual
>litigation in court that Doug refers to, that is a large second-order
>effect referred to as defensive medicine.

  Like I said earlier, that 1% was not a reference to litigation costs;
it's a total estimate.

   Here is the big intangible nebulous that doctors and hospitals
love to cloak their high fees under.  What specific medical tests
and services can be directly attributed to practicing defensive medicine
as opposed to just being thorough or reassuring a persistent patient or
helping a doctor who needs some extra cash to replace some equipment in
his office that month?

  Now here are some facts: fact one is that the number of malpractice
suits has been declining since 1985 (CR- July 1992).  The AMA itself
has estimated that the total cost of medical malpractice, including
premiums and practicing defensive medicine (which is biased of course,
since doctors can categorize a lot of services as "defensive") at
17 percent of physicians earnings.  Note that their malpractice
premiums are factored into this number.  They do not lose money by
practicing defensive medicine; they *do* pay out for malpractice
insurance premiums.  According to the Medical Economics magazine's 
annual survey in 1993 of physicians, malpractice premiums cost doctors
3.7 percent of their practice receipts.  So if you subtract this
3.7 number from the 17 percent figure that the AMA itself estimated,
you have 13.3 percent of physicians fees accounted for defensive
medicine alone.  Again I want to stress that they are not paying
this 13.3 percent- this is supposedly the cost to the taxpayers 
for defensive medicine practices alone.   It does not cost the 
doctors to practice defensive medicine at all- in fact the incentive
is built in the system to "do more" and they do profit from it.
  Ok, now let's play the numbers game to determine what percentage 
of the total US health care bill is attributed to practicing defensive
medicine.  I don't think Gary or anyone else has ever sat down and
tried to determine what it is given the statistics available, even
though they are quick to accuse malpractice of consuming a large
amount of the US health care bill.  Since I have 1990 numbers for 
percentage of health care spent on physicians' fees that is what I'm
using.  I believe all of my stats so far are for the same year (1990)
except the 3.7 percent of malpractice premiums- that is a 1993 number,
but I don't think this will make much of a difference either way for
the final analysis.   Hopefully after this run through we can put the
myth to rest once and for all that malpractice is a major factor
in the rising cost of US health care costs, even if some mis-informed
people believe it to be otherwise.  The numbers below will show that
the cost of malpractice is a smaller percentage of the US health
care bill than pharmaceuticals, which is currently 7% of the total bill.

  More facts- according to the Health Care Financing Construction (HCFC)
in 1990, the percentage breakdown of health care costs were as follows
(this has been posted many times before):

%WHERE IT WENT:
%
%Hospitals:                      38%
%Other personal health care(2)   23%
%Physicians                      19%
%Nursing Homes:                   8%
%Other spending(3):               7%
%Private Insurance Companies(1)   5%
%
%(1) Administrative expenses
%(2) Includes dental and other professional services, drugs, home health care
%(3) Includes public health spending, medical research, construction
%
%Source: Health Care Financing construction

  From our previous analysis, defensive medicine accounted for 13.3 percent
of physicians wages after we factor out the 3.7 percent of insurance
coverage.  So in 1990 physicians fees accounted for 19% of the total health
care bill, and 13.3 percent of that is the total cost of defensive medicine
as a percentage of the US health care bill.  Guess what that works out 
to- 2.5 percent of the total US health care bill for practicing defensive
medicine *only*, and this is a biased estimate in favor of the AMA!  This
is the big, dark monster that the doctors say is driving the health care
costs up.  If we factor in the 3.7 percent reported by doctors (which is
also a biased estimate) that they say they pay in malpractice insurance,
that only adds 0.7 percent to the total health care bill spent on malpractice
(3.7 percent of physicians fees, which are 19% of the total health care
bill).  So if we add that to the 2.5 percent we calculated earlier, we
have a GRAND TOTAL of 3.2 percent of the US health care bill attributed
to malpractice- insurance premiums and defensive medicine- and that is an
estimate in favor of the doctors (a high estimate).

On the low end of the estimate, we have the U.S. Department of Health and
Human Services stat that I quoted earlier in this article estimating the
total cost at 1% of total health outlays.  I would say the true number is
somewhere in-between those two- 1% and 3.2%.

  So even if you accept the high-end estimate, the total cost of 
defensive medicine and malpractice insurance is under 4% of the US
Helath Care costs.  This is not rocket science folks, just simple
math and cold hard numbers.  If someone wants to dispute them, they
better go dig up their own stats and post their own breakdown and
conclusion before they espew otherwise.

  Next question please :-)

  Doug