Oh come on, I first said "something like 2%" and after a short bit of research found the number was 2.4%. Not bad for a several year old memory, I think.

Neither you nor I have read that paper which gives the 2.4% value. It may have included the insurance overhead already.

In any case, the health reform law you linked to covers medical insurance for patients, while the 2.4% we're talking about is malpractice insurance for doctors. You can't apply the numbers from one system directly to the other.

The US is the third most populous country. Of course any numbers related to health care are going to be huge. We spend 2.6 trillion or so on health care in a year. You can do as you did and use 100 trillion over 10 years, or you can say that $10 billion per year / population of the US, is $32 per year, or under 0.10 cents per day per person. Note that 2.6 trillion / population of the US => $8,387 per person per year, and 2.4% of that is $201 per person per year or $23 and $0.55 per person per day, respectively.

Quoting again from Wikipedia: "In December 2011, the outgoing Administrator of the Centers for Medicare & Medicaid Services, Dr. Donald Berwick, asserted that 20% to 30% of health care spending is waste. He listed five causes for the waste: (1) overtreatment of patients, (2) the failure to coordinate care, (3) the administrative complexity of the health care system, (4) burdensome rules and (5) fraud."

I do not know if (1) is due to defensive medicine or other reasons. For example, when I broke my toe, I asked for extra x-rays even though it wasn't needed. I know friends who got MRIs even though not essential, because it was included in their insurance plans. Or since the doctor gets reimbursed per test, there's a financial incentive to do more tests (so long as cost less than the reimbursement).

Searching now, I found no useful numbers about the overall cost of defensive medicine. Indeed, it seems to be pretty hard to resolve. I came across the statement that "variation in intensity of treatment from one hospital or city to the next has been well documented among the government's veterans hospitals, where there is no financial or business drive for more rather than less treatment", so it's going to be noisy data.

Doctors do commit malpractice. There has to be some system in place to handle that. Our system now is through the courts. Just how bad are 'frivolous' medical lawsuits?

Let's take http://en.wikipedia.org/wiki/Medical_malpractice#The_case_fo... as the source for numbers. This should be biased for the doctors. The AMA says 60% are dropped without payment and do not go to trial, costing $22,000 in fees. ... Sneaky AMA! Notice that it does not list the percentage of payments made without going to trial. This makes that section unusable for what I was going to do.

I had to go to http://bjs.ojp.usdoj.gov/content/pub/pdf/mmicss04.pdf and find that in the states where payout and lack of payout is required to be reported (ie, Missouri and Maine), some 1/3rd of claims get a payout. Median payout (using Missouri's numbers since they have 8x more reported cases than Maine) is $110,000 for 2,598 cases out of 8,379 total cases. Of these, under 5% are reached by a trial decision.

So, 65% get no payout, and each costs the doctor (using the AMA numbers) $22,000 in legal fees. 30% gets a payout of $110,000 and costs the doctor $22,000 in legal fees, and 5% are reached by trial, of which 90% is found to have no payment (at $110,00) to defend and 10% is found to have a payment of $342,000 and still needs $110,000 to defend. Further, there are about 17,000 cases per year in the US.

Costs because the doctor was actually negligent: (0.30 * (110+22) + 0.05 * 0.1 * (342+110)) * 17000 = $700 million.

Costs because the doctor was incorrectly accused as being negligent: (0.6 * 110 + 0.05 * 0.9 * 110) * 17000 = $1200 million.

Hence, even if you could magically make all frivolous cases disappear, you could only reduce the payouts+legal expenses by 60%, and you almost certainly wouldn't make defensive medicine practices disappear because there will still be court cases, and some rare ones in the $1,000,000+ range.

This is something I'm nitpickey about because I see liability lawsuits as being the only strong tool individuals have against negligent practices. I don't want to see legislative attempts to curtail that power when the underlying justifications are unfounded. From what I can tell, the cost for overtreatment and liability, while large in aggregate numbers, is simply not one of the major reasons for increasing health care costs in the US. Especially since liability rates haven't gone up the last three years.