CBO Predicts Modest Savings From Medical Malpractice Reform

Congressional Quarterly/Newscom

In response to an inquiry by Sen. Orrin Hatch (R-UT), Congressional Budget Office chief Doug Elmendorf finds that medical malpractice reform would reduce the deficit by about $54 billion over 10 years.

“Combining the effects on both mandatory spending and revenues, a tort reform package of the sort described earlier in this letter would reduce federal budget deficits by roughly $54 billion over 10 years,” Elmendorf writes. That $54 billion is comprised of an expected $41 billion reduction in mandatory spending, and about $13 billion in new revenues.

And just what sort of statutory changes would be needed to generate the reduction?

  • A cap of $250,000 on awards for noneconomic damages;
  • A cap on awards for punitive damages of $500,000 or two times the award for
    economic damages, whichever is greater;

  • Modification of the “collateral source” rule to allow evidence of income from
    such sources as health and life insurance, workers’ compensation, and automobile
    insurance to be introduced at trials or to require that such income be subtracted
    from awards decided by juries;

  • A statute of limitations–one year for adults and three years for children–from
    the date of discovery of an injury; and

  • Replacement of joint-and-several liability with a fair-share rule, under which a
    defendant in a lawsuit would be liable only for the percentage of the final award
    that was equal to his or her share of responsibility for the injury.
  • A bit of good news for Hatch, though it comes after Republicans have spent two days diminishing the importance of CBO findings, after the agency determined the Senate Finance Committee health care bill would be a deficit reducer.

    Obama announced plans to begin experimenting with tort reform at the state level during his health care speech to Congress last month.

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