The Great Debate

Incidentally, WL’s precision consists of relying on a GAO report that does not support his conclusions and an admittedly sad story about his grandmother which illustrates the folly of caps. Read the GAO report – it is truly nonpartisan.

Also, don’t rely on info from sources like ATLA, or the AMA. Read the documents that come from the insurers, and insurance trade journals, and physicians magazines, like the ones from the links below. If you don’t believe them, then your belief in tort reform stems solely from faith, and has nothing to do with the facts, and you should admit it:

http://www.consumerwatchdog.org/malpractice/rp/2059.pdf

http://www.consumerwatchdog.org/malpractice/rp/2058.pdf
(Page 4, line 17)

And for an excellent overview of the whole thing:

http://www.memag.com/memag/article/articleDetail.jsp?id=141338

But let me say this. We agree more than we disagree:

1. That the way we fund health care is seriously messed up. The disconnect between consumer and provider is far too large.

2. That malpractice rates have skyrocketed.

3. That the coding games insurers play with you guys are ridiculous. They do it with insurance defense attorneys as well, and you guys are suing them for it, as you should.

4. That something drastic is coming sooner rather than later. (Personally, I believe it’s national health care, and we’ll have workers comp style malpractice schemes along with it)

But we disagree that further limiting the rights of those who have already been injured (at least with the legislation currently being proposed) will achieve any of the following:

1. A cheaper health care bill.

2. Relief from premiums for physicians.

3. More payments to the truly injured.

I doubt few of you realize just how broad the HEALTH Act being proposed in Congress is. What it’s particular provisions are. But many of you back it wholeheartedly. And for that, yes, you are backing the same drug and insurance companies which you claim to despise. In fact, you are doing their dirty work for them, because they will receive the primary benefit.

And for those of you who haven’t made up your mind, if you’re a voter and thus a potential juror, when you see statements like “Lawyers want to confuse jurors” ask yourself just how stupid you are, and if it’s as stupid as DB thinks you are. And ask yourself how much evidence he’s presented to a jury, how many trial advocacy classes he’s attended, and what the source of his knowledge is? Because it’s probably anecdotal at best, and comes from a newspaper article.

And by the way, DB, the Vioxx judgment, at least in terms of the punitive portion, made perfect sense. It was the amount of profit (gross or net I can’t recall) made by Merck off Vioxx after the date they received information that should have led them to pull the product or at least notify physicians about the increased risk, rather than instruct their salespeople to obfuscate and deflect when confronted with questions from physicians. That’s the kind of thing you would know had you bothered to look more closely at some of the evidence the jury saw prior to reaching your conclusion. Incidentally, you can call the court and the court reporter will give you a copy of the transcript. You’ll have to pay for it though.

I encourage you to focus on the merits/drawbacks of the actual legislation being presented, DB. And to base your conclusion in facts and thorough, non partisan examinations. Not anecdotes and prejudice.

Stories of this or that rich lawyer, or this or that verdict you read about in a newspaper that you believe is unjust are interesting, but it doesn’t address the merits of the legislation you are backing. And that’s really what this is all about. Does that legislation achieve any of the goals you think it does?

Incidentally, it’s not that great of a debate because its impact is minimal on the public at large. Even if tort reform is enacted, it will not:

1. Lower health care bills
2. Have much impact on malpractice insurance prices
3. Hurt anyone other than a small percentage of people who have suffered extremely severe injuries as a result of a physician’s negligence.
4. Lower the amount of “defensive medicine” (real or imagined)

The only ones that it will help are insurers, who will have a ceiling on their exposure, yet no constraints on what they charge for insurance. And this group, based on what they’re paying upper management, is doing just fine as is.

If the HEALTH act passes, the impact will be somewhat larger, as pharmaceutical companies and basically any provider of any product related to health care will have an incredible amount of liability protection. But don’t look for that to be passed on in savings to the consumer.

It’s at best a Middling Debate. The level of misguided rancor stirred up in many physicians is what makes it seem elevated.

The study you refer to has been unable to be duplicated in a larger scope other than: “all elderly Medicare beneficiaries treated for serious heart disease in 1984, 1987, and 1990″ It takes a pretty big leap to extrapolate that into $50-100 billion annually nationwide.

Plus, since we don’t (without paying for it) know which states (I believe it was limited to just one, although I may be wrong on that) this study covers, and the particular reforms enacted therein, we can’t really draw very many conclusions from a one paragraph blurb, can we? I would hope a physician’s analysis would be more rigorous than that. And I would hope that you’re not trying to argue that you wouldn’t perform this or that test solely because you might only have to pay $250,000 in noneconomic damages. After all, economics will still have no caps.

But since you like studies, you might enjoy this one:

http://www.centerjd.org/ANGOFFReport.pdf

Using data submitted by the 15 largest insurers themselves to the state insurance commissions between 2000-2004, the report found that premiums collected had doubled while claims paid had remained flat. Also, that the insurers have tripled the surplus they are sitting on, and have almost double what their own industry deems sufficient. And again, this is based on reports the insurers themselves filed.

“(1) MALPRACTICE REFORM INFLUENCES PHYSICIAN MIGRATION.”

And? Sure it’s true. This shows that physicians believe the hype. What’s interesting is that it doesn’t reference actual claims paid or anything regarding how the insurers set their rates or determine increases.

“(2) MALPRACTICE REFORM LOWERS MALPRACTICE PREMIUMS. A 2003 Governmental Accounting Office report found that “Limited available data indicate that growth in malpractice premiums and claims payments has been slower in states that enacted tort reform laws that include certain caps on noneconomic damages.””

Ahh, the sin of omission. I will agree with you that the sentence you quote is in there. The reader seeking the full story will want to be sure to read the whole report, which will give you the full story. Including the sentence that is in the same paragraph as WL’s quote above:

“GAO could not determine the extent to which differences in premiums and claims payments across states were caused by tort reform laws or other factors that influence such
differences.”

And with regard to point 3, I’ll let the GAO report (from the report he links to) respond to that below, where they address exactly the study he’s claiming supports his position:

“Physicians reportedly practice defensive medicine in certain clinical situations, thereby contributing to health care costs; however, the overall prevalence and costs of such practices have not been reliably measured. Studies designed to measure physicians’ defensive medicine practices examined physician behavior in specific clinical situations, such as treating elderly Medicare patients with certain heart conditions. Given their limited scope, the study results cannot be generalized to estimate the extent and cost of defensive medicine practices across the health care system.”

WL, I am curious as to your take on the Angoff study, which utilized the insurers own reports:

http://www.centerjd.org/ANGOFFReport.pdf

Curious,

As I understand the matter, Angoff essentially makes three claims in his study: First, Angoff claims that insurers’ premium collections have grown greatly while their amount paid in claims has essentially remained flat. Second, he claims that some malpractice carriers’ premiums increased while the claims and PROJECTED claims payments were not increased. And third, he asserts that many malpractice carriers have thus increased their surplus unnecessarily. This is — more or less — what he claims.

There are, however, several problems with this study:

(1) Angoff chooses for his study the top 15 performing insurers. Consequently, his results are not generalizable to the remaining insurers. I mean, after all, the top 15 would be the most stable and not representative of — say — the middle or lower tiers. Why not make a random selection to get a more accurate picture? Certainly, Angoff could have easily accomplished a randomized sample. Because he did not — when it could have easily been done — makes me think that he was intentionally looking for a preconceived result.

(2) Angoff failed to include administrative and defense costs, which in the case of medical malpractice easily consume 50% of every dollar. For instance, even though X Insurance Corp. took in $2,000,000 in premiums and only paid out $100,000 in claims, much of the remaining monies are used to defend claims through attorneys’ fees and expert testimony. In fact, the bulk of monies spent in med mal claims are consumed by these 2 expenditures. Why not include those in his assessment? (I am beginning to see a trend here.)

(3) I also have to question Angoff’s uncomplicated NAIC surplus analysis. As Angoff is surely aware, despite the fact that the NAIC has a formula for calculating surplus, individual states actually prescribe what minimal surplus is acceptable for doing business within that state. Thus, a company using NAIC’s formula may be far above what the NAIC considers reasonable, but at the same time, may be marginally in compliance with the surplus amount established by New York, Alabama, California, or Texas. Thus, this argument is hardly convincing for me.

(4) Many insurers have gotten out of the med-mal business. One might ask Mr. Angoff if such insurers are making so much money, why are they leaving. I think the answer is clear: Mr. Angoff’s report was methodologically fashioned to acheive his preconceived notions.

(5) And while this is somewhat ad hominem, it is my personal opinion that you would be hard-pressed to find a more larger-than-life plaintiffs’ attorney than Angoff. He is a member of the Missouri Association of Trial Lawyers and the Association of Trial Lawyers of America. He also serves as a consultant to numerous trial lawyer associations. He currently works for Roger Brown & Associates, a personal injury law firm based in Missouri. While pointing this out does nothing to discredit his arguments — I trust I have done this already (see above) — I find it is always helpful to know where a person is coming from.

In conclusion, I do NOT trust insurance companies, and in fact, blame them for many of the evils of our current practice of medicine. BUT, on the other hand, I don’t trust Angoff either.

“1.you deride a well researched piece of research ,
which has hundreds of well documented footnotes, scrutinized by well respected economic academics and with the reputation of Mass Institute of Technology, based on a brief one paragraph overview ”

I do not deride it, I simply am pointing out the limits of its scope which it freely admits and thus the inability to draw broad conclusions from it. Do you really feel comfortable extrapolating those findings across all of health care?

“you then somehow come to a conclusion that I did not read the article and then use this as a reason to discount the premise: defensive medicine , as a result of our current legal climate, billions to our nation.”

It is you, my friend, who are making the unsubstantiated claim here. Defensive medicine is impossible to determine – mostly because no physician will go through line by line and point out the tests he did that were medically unnecessary (at least if he wants to get paid for them). But lets say that I am wrong – how does current proposed legislation change that?

“4. you quickly then cite an article which has nothing to do with the concept of defensive medicine costs.”

Then why do they address it with this statement:

““Physicians reportedly practice defensive medicine in certain clinical situations, thereby contributing to health care costs; however, the overall prevalence and costs of such practices have not been reliably measured. Studies designed to measure physicians’ defensive medicine practices examined physician behavior in specific clinical situations, such as treating elderly Medicare patients with certain heart conditions. Given their limited scope, the study results cannot be generalized to estimate the extent and cost of defensive medicine practices across the health care system.””

My intent wasn’t to confuse you. If it had been, I wouldn’t have quoted or linked the GAO study. In fact, it was WL who first did so. I would have paraphrased and expected you to believe me if I were trying to confuse you.

Let’s say we agree to disagree on what the studies say, though. How does current legislation address any of your perceived problems?

Curious,

(1) Angoff’s methodology was flawed intentionally to achieve a sample that was not representative. If that occurred in the context of Phizer’s selecting the “best” patients, I have no doubt that you would condemn it. Hmmmmm?

(2) Angoff is trying to paint a picture that insurance companies are rippiing everyone off, including docs. To “prove” this, he fails to include some of the largest expenditures in his analysis, which greatly exaggerates the appearance of gain. However, Angoff knows about what they spend. Heck, we all do. Reasonable efforts should have been made to include this in his analysis. If exact figures are not known, he should have done 2 different analyses … one with and one without with accompanying customary estimates and caveats.

As it is, I just am left with the feeling that he is being subtly dishonest with his claims.

(3) I do know in some instances that what NAIC requires and what states deem as marginally sufficient differ. For instance, the NAIC may require X dollars. Texas may also require X dollars — simplified for purposes of this discussion. But based on the number of claims filed, etc… if the estimate is wrong, keeping the bare minimum surplus on hand may be fiscally poor management. If for any reason you should fall below, you are likely barred from conducting business.

I mean, seriously, do you honestly want your insurance company to have the bare minimum surplus required by law? I think that is profoundly stupid.

(4) I am happy to hear that many more med-mal carriers are returning. You could not prove it by me, but hey, what do I know? I am just a lawyer and almost M.D. too.

(5) No, I am not JUST shooting the messenger. I freely admitted my last comment was ad hominem. But I think it goes to bias.

First, even a lawyer like you knows that bias is admissible in a court of law under the rules of evidence.

Second, I already methodologically shot the message — which wasn’t that hard to do.

Third, what do you suggest your comment was in a prior discussion? I quote you — “I’ve read the JAMA study and I’m familiar with Dr. Kessler’s work. Like any good lobbyist with a cause, he has always found through his research that tort reform was good.” See your post dated, September 3rd, 2005 at 8:21 am under the Vioxx heading.

Hypocrisy is not becoming.

Curious,

(1) Obviously, yes, choosing the top 15 financially rated insurers is a methodological flaw. A pretty significant one too. If you don’t recognize this as a methodological flaw, you need to repeat elementary stats.

(2) I can’t believe we are again arguing about OBVIOUS methodological flaws in this “study.” If you assume about 50% of every dollar is consumed just in administrative costs (this is a conservative and near universal acknowledgement), it’s not too hard to really figure some things out.

To illustrate, it really doesn’t matter if an insurance company takes in $2,000,000 in premiums and pays out $1 in claims, IF they expended another $2.5 mil to pay attorneys’ and expert witness fees. IF that happens, they are bankrupt. I would further assume, IF THAT HAPPENED, they would need to increase premiums … despite the fact that Angoff’s study showed they had a PRESUMPTIVE AND APPARENT gain of $1,999,999. In this hypothetical (albeit admittedly and extremely simplified), they would actually be in the red.

Surely you can see that AnGOOF’s omission is an incredible short-coming. I honestly don’t understand your refusal to acknowledge this point.

(3) You and I are arguing over nothing in regards to the NAIC. States — not the NAIC — set the minimal amounts.

You either do — or should know — that insurers are licensed on a state by state basis. Each state has a Department of Insurance — or similar regulatory body (I have an attorney buddy that works in my home state’s Dept. of Insurance) — that regulates the insurers capital and surplus requirements based on a number of factors, including but not limited to the companies’ types of investments and coverage.

And IT VARIES from state to state. Here’s a quote from another GAO report: “States use a variety of methods to monitor health insurers’ solvency, including minimum capital and surplus levels, investment restrictions, and financial reviews. The specific requirements VARY BOTH BY STATE AND BY TYPE OF INSURANCE.” (Emphasis added.) That is precisely what I said earlier. http://www.gao.gov/archive/1996/he96161.pdf

I guess what I’m trying to say is that if you think I’m gonna look up 50 different surplus requirements and figures to compare to the NAIC recommended level, YOU’RE NUTS! However, you can be the legal-eagle hero and prove me wrong.

If you don’t believe what I have been saying, … you can call as many Insurance regulatory agencies as you want — there are (surprise!!!) about 50 of them — and figure it out for yourself … FIRST-HAND. But after you find out I’m right, maybe you will let everyone on this page know that I was right all along.

Moreover, (from the same GAO report) “Most insurers maintain higher levels of capital and surplus than the minimum state requirements ….” And according to the NAIC — whose formula AnGOOF uses to slam the industy — this larger surplus is hugely desirable: “An excess of capital over the amount produced by the risk-based capital requirements contained in the Act and the formulas, schedules and instructions referenced in this Act is desirable in the business of insurance. Accordingly, insurers should seek to maintain capital above the RBC levels required by this Act.”

What AnGOOF presents in his “study” is terribly misleading and would lead to abyssmal business practices if followed. Can you just imagine what would have happened in New Orleans if insurance companies just kept the minimum? Absurd.

Oh, by the way, AnGOOF also performs his surplus analysis for 2 of the 4 years. Wanna guess why? Not too hard to figure out. More cherry-picking for results. You’ll have to figure this one out on your own tho. No more spoon-feeding … for at least a couple of weeks … when my Board is finished.

(4) And as far as shooting anything down, it is obvious that Angoff’s study is methodologically flawed to every one who reads the analysis. The question is not WHETHER it is flawed, but whether you will accept his conclusions in spite of the flaws.

You can either say to yourself that those flaws are fatal — especially since they were in his control to correct — or you can minimize them and accept the study. I really don’t care. The choice is up to you.

But the flaws are definitely there. Period. And if you can’t see that, well, there’s not much point to even continuing this rant.

(5) Without knowing more than what information you put into your last question, I would say (a qualified) yes.

Finally, I fear that I must bid this venue adieu … for now. I have a major board exam that will only determine my fate for the next 3-5 years of my life.

No pressure.

But I should probably study anyways.

I shall return … in a couple of weeks.