From: king@reasoning.com (Dick King)
Newsgroups: sci.med
Subject: Re: Physician's Incomes
Date: 18 Dec 92 20:26:42 GMT
Distribution: usa
Organization: Reasoning Systems, Inc., Palo Alto, CA

In article <92352.175816DGS4@psuvm.psu.edu> <DGS4@psuvm.psu.edu> writes:
>In article <gdavis.724551414@griffin>, gdavis@griffin.uvm.edu (Gary Davis) says:
>>
>>
>>I have always considered lawyers parasistic upon both medical
>>practitioners and the general public. I'm curious how much health
>>care bills could be reduced by decoupling these vulchers from the system.
>
>Not much.  Malpractice premiums represent only about 15% of total costs
>for the average physician, though they are much higher for OBGYN, surgeons,
>anesthiologists, etc.  Premiums have been dropping about 10 to 15 percent
>per year in recent years with no discernible effect on costs.
>Several estimates of the total costs of malpractice, including defensive
>medicine put it at 20 to 30 billion.  While it is important to reform
>the system because it does a lousy job of deterring negligence, it is
>unlikely to result in a big drop in health care costs.

It also should be noted that some malpractice premiums are paid to patients who
then use them to buy medical care to deal with the problems caused by the
malpractice.  This money is being counted twice as a cost of medical care.

A simple case should make this clear.

In the US, a patient is treated at what would be a cost of $1000 were there no
malpractice insurance.  The doctor sees 100 such patients per year.  Actuaries
know that 1% of the time the doctor screws up to an extent that costs $10,000
to fix, so the insurance company, expecting the doctor to get hit with one such
judgement, charges $15,000 per year to pay for the judgement, their expenses,
and their profit.  Therefore the doctor charges $1150 for the treatment.  Also,
in fact one of the doctor's patients needs that extra $10,000 treatment.
People who figure the cost of medical care say that the cost of medical care
for these 100 patients is 100*1150 + 10,000, or 125,000, but 10,000 of that
gets bounced out and then back into the medical system.  Since each of the 100
patients, even the one that needed the expensive procedure, is $1150 poorer
than he was before he sought treatment, it's reasonable to say that in fact
that it has cost the nation $115,000 even though the sum of all the medical
bills was $125,000


In another country where the taxpayers pay for medical care collectively rather
than individually or in voluntary groups, there would be no malpractice
insurance, but we have no reason to suspect that the quality will be any
better, so in this country the taxpayers will pay $1000 each for the 100
procedures, plus $10,000 for the extra procedure.

Indeed, of the $15,000 insurance premium total, only $5000 is consumed and is a
cost of the way the US does medical care; the $10,000 is only rearranged by an
admittedly complicated and boroque process so each patient pays 1% of the large
amount of extra care that one patient needs, rather than having one patient
take the entire hit.



I think you can even argue that the portion of the premium used to pay the
"pain and suffering" portion of a malpractice settlement should not be counted
as a cost of medical care, at least for comparisons, at least to the extent
that they're used by the injured patient to mitigate [ie., specially equipped
vans, special air conditioning, a heated backyard swimming pool for someone who
suddenly has crotchety joints], unless the comparison countries' medical care
budgets include these items.


-dk