Obama on Malpractice Reform: No Change That We Can Believe In

Did you see that Barack Obama is now pushing medical malpractice reform, as part of his moving to the center? You would be forgiven if you got that impression, because the idea that the administration has moved to the middle on malpractice has been a major meme emerging from the President’s 2011 State of the Union address. And yet it’s simply not true. The White House and the Democratic Party are still as devoted as ever to the financial interests of trial lawyers--no matter what the cost to the country.

Gullible media coverage aside, there’s no real evidence that the President has given an inch on the basic issues of medical lawyering and liability. Nevertheless, those are the issues that are not only making healthcare more expensive, but are also stifling the Serious Medicine innovation that would make healthcare cheaper, as well as better. After all, it’s not what lawyers do to doctors that matters most, it’s what lawyers do to us--to our health and to our life-prospects.

Yet many Americans might have the impression that something big is happening in medical malpractice, that the political ice is breaking on “med mal.” In the course of defending his Obamacare legislation in his January 25 SOTU Obama declared, “I’m willing to look at other ideas to bring down costs, including one that Republicans suggested last year--medical malpractice reform to rein in frivolous lawsuits.”

Those 26 words set off a wave of media interpretation--and over-interpretation. A headline at a Foxnews.com affiliate read, “Obama pushes limits to medical malpractice suits.” Mark McKinnon, well-known Republican media consultant, wrote the next morning in The Daily Beast, “I was pleased to see President Obama talk about tort reform.”  And the headline atop a post in The Frum Forum by Dr. Stanley Goldfarb of the University of Pennsylvania medical school proclaimed, “Obama Takes the Lead on Malpractice Reform.”

Yet maybe we need to look at the situation more closely. Dr. Goldfarb, for instance, asserts that malpractice reform is “a key part of the required approach to avoid financial calamity.” Dr. Goldfarb is absolutely right, but there’s no evidence that Obama agrees with him. An occupational hazard of punditry, to be sure, is to assume that the other person agrees with you, even to the point that you, the pundit, find yourself filling in the blank spaces between the other person’s words. Indeed, so long as a powerful person, such as a president, says he is willing to “look at” an idea, some proponents will wishful-think equivocal words into unequivocal support.

In fact, Obama’s 26 words in the SOTU need to be weighed against the two years of his presidency, where no serious action against “frivolous” lawsuits has been taken, to say nothing of the multiple lawsuits that are merely costly and harmful. Once again, we can observe that an overall cost to the country is a direct gain for the tort bar. Inside every one of those million- and billion-dollar settlements is a 40-percent contingency fee to a trial lawyer. And trial lawyers as a group, of course, are smart enough to share their wealth with politicians who protect their ongoing system of litigation plunder. Weighed against the deep structure of pro-trial-lawyer interests inside the Democratic Party, the brief words of a president in the middle of a re-election campaign seem fleeting indeed.

Of course, some might say that the White House has been busy, what with Egypt and all. But on Sunday morning, January 30, even as events in Egypt dominated the news, the White House was still prominently featuring its boilerplate State of the Union promotion package. And that’s right and proper, because, after all, we have a large federal government that does many things at once.

So perhaps elsewhere in the executive branch, we might hope, top aides and advisers are diligently crafting a new look at malpractice. That’s a possibility--but let’s take a look.

Accompanying the President’s SOTU was a White House fact sheet, boldly titled, “President Obama's Plan to Win the Future."  And in that document we find this single sentence: “The President is urging reforms to further reduce the rate of health care cost growth, including medical malpractice liability.” That’s it--just 19 words. Hard to call that much of a foundation for med mal progress.

Meanwhile, as another part of the White House communications effort, on January 28, Health and Human Services Secretary Kathleen Sebelius, the administration’s point person on health issues,
sat down for a Q & A session with reporters/bloggers; only one “Q”, out of the 13, concerned malpractice. And to that Sebelius answered, “The President has said pretty consistently that he does not support caps,” referring to the idea of limiting liability damages--a central plank of malpractice reformers. Instead, Sebelius cited new government efforts at “gathering data” on lawsuits and their effect on the cost of healthcare. She was referring to a plan that she herself launched in September 2009, when HHS began doling out $25 million in grants to encourage states to experiment with ways to deter malpractice lawsuits. These “demonstration projects,” as they are called, are based on existing programs in which doctors who make a mistake--or are accused of making a mistake--apologize early and seek to negotiate a settlement with the victim. Other projects include screening systems in which states have formed medical-expert panels which must rule that patients’ complaints have merit before they may sue.

Such plans are a good idea, but they have had little effect, because they fail to take into account the great-white-shark voraciousness of malpractice-feasting trial lawyers. If one Googles just the two words “malpractice money,” for example, one immediately sees an ad for a malpractice attorney, complete with a toll-free number to call.

It might seem obvious that ambulance-chasing comes at a cost to the healthcare system--reasonable estimates vary from $55 billion to $200 billion a year--but for her part, Sebelius doesn’t seem to agree; as she told her questioner, “malpractice insurance rates are a tiny fraction of healthcare costs.” As an aside, we might note that it’s little wonder that Richard Foster, chief actuary of the Medicare program, is skeptical that any savings will be achieved through Obamacare.

Moreover, in an opinion piece for AOL News, signed by Sebelius, the word “malpractice” did not appear once. In other words, without the prompt of a question, Sebelius and her HHS ghostwriters make no effort to highlight malpractice. In fact, a look at the HHS website finds nothing new on med mal. Yet this absence should be no real surprise, in view of Sebelius’ background; she spent a decade as the executive director of the Kansas Trial Lawyers Association.  (We might also note that one can hear only the sound of med mal silence, too, at the Department of Justice.)

Yet the idea of malpractice reform is popular with many key constituencies and much of the public, and so the President has talked up the idea of med mal from time to time. On June 15, 2009, for example, he addressed the American Medical Association in Chicago, saying that he understood that “doctors feel like they are constantly looking over their shoulder for fear of lawsuits.” He added, in words suggesting that he felt the medical profession’s pain: “Some doctors may feel the need to order more tests and treatments to avoid being legally vulnerable. That's a real issue.”  So yes, the AMA got a little bit of neo-Clintonian triangulation, as well as pain-felling, but no commitments.

The President added more soothing words, even as he denied the central policy goal of the AMA--that is, to impose caps on damages as a way of disincentivizing their enemy, the trial lawyers. Finally, he shifted the focus back to his own goal at the time, which was garnering support for his healthcare legislation:

While I’m not advocating caps on malpractice awards which I believe can be unfair to people who've been wrongfully harmed, I do think we need to explore a range of ideas about how to put patient safety first, let doctors focus on practicing medicine, and encourage broader use of evidence-based guidelines. That's how we can scale back the excessive defensive medicine reinforcing our current system of more treatment rather than better care.

The AMA did, in fact, endorse Obamacare--despite its not making any headway on caps. Yet while the AMA might have been an easy sell, others were more suspicious. The day after Obama’s AMA speech, The Wall Street Journal editorial page nailed the issue in a piece entitled, “The Malpractice Gesture.” That edit noted how Obama was able to orate sweet nothings and yet persuade gullible audiences that he was on their side:

The paragraph he appended to his stock speech on health care for the American Medical Association yesterday didn’t offer much detail--"I do think we need to explore a range of ideas," he boldly declared--but trial lawyers and their stratospheric jury awards and settlements have led to major increases in the medical malpractice premiums, thus driving up the overall cost of U.S. health care.

The Journal emphasized that there was nothing specific about med mal in Obama’s words--indeed, that his deeds, in preserving the status quo, contradicted his words:

Mr. Obama's cri de coeur might have had more credibility had he not specifically ruled out the one policy to deter frivolous suits. "Don't get too excited yet," he warned the cheering AMA members. “Just hold onto your horses here, guys. . . . I want to be honest with you. I'm not advocating caps on malpractice awards.” In other words, the tort lottery will continue. California, of all places, has had great success in holding down liability costs for doctors and hospitals after a 1975 reform that limited pain and suffering damages -- balanced against the public interest of fairly treating victims of genuine malpractice.

And so the Journal summed up Obama’s deliberate fuzziness, providing some pointed political context:

Mr. Obama showed again with his AMA speech that he's willing to nod at the concerns of his political opponents and take media credit for brave truth-telling, only to dump his conciliation if it offends liberal interest groups.

Mr. Obama's aides have openly told the press that he views medical liability as a “credibility builder”--that is, a token policy to keep the health-care industry at the bargaining table. Given that the only “bargain” that seems likely to emerge is another major step toward total government control of the health markets, the President seems to be counting on credulity.

So there you have it: Obama said something nice but vague about malpractice reform a year and a half ago--a “credibility builder” for the credulous. And so what has happened since? Who was right: the AMA in its hope that Obama would deliver legal reform of some kind, or the Journal in suspecting that Obama was playing a rhetorical shell game? As we have seen, in Fall 2009, the Obama administration established kumbaya-ish “demonstration projects,” but in his January 2010 SOTU, the President made no mention of malpractice reform.

Indeed, in the two years of Obama’s presidency, virtually nothing has happened on the key issue of malpractice reform--namely, requiring a cap on the shark-like entrepreneurialism of the trial lawyers. Oh wait, something did happen: This past Tuesday night, the President said that he would “look at” malpractice reform. Nevertheless, anyone still thinking that Obama truly wishes to do something about med mal--thereby alienating the trial lawyers whom he needs to finance his re-election--should consult the “Peanuts” character Charlie Brown, still hoping for Lucy to keep the football in place so that he can actually kick it.

One clear-eyed observer is Forbes magazine’s David Whelan, who observed in the wake of the 2011 SOTU that the president’s nice words about malpractice “warrant skepticism.”

OK, Forbes is over on the political right, but even The Washington Post noticed that Obama wasn’t saying very much in his SOTU--about malpractice, or, indeed, about anything else. And this non-specificity, the paper surmised, was a deliberate strategy. And yet, as the Post’s Ruth Marcus noticed, even a few friendly words were enough to make many observers happy. In a Friday column entitled, “From President Obama, lots of talk, little leadership,” Marcus criticized the 44th President for merely outlining, as opposed to advocating, “potentially cost-saving measures to control Medicare spending.” She added caustically, “Emphasis on potentially.” Yet Marcus lamented that “some serious people” had “grasped at wispy tendrils of seriousness” in the president’s speech. And yet detecting such seriousness was an illusion, she concluded: “I hope they are right but fear that they are deluding themselves.” In other words, anything Obama said about a tough issue on Tuesday night was not to be taken seriously--because Obama himself wasn’t taking his words seriously.

So where do we stand? I put the question to Jim Wootton, former president of the U.S. Chamber Institute for Legal Reform, who foresees med mal gridlock ahead:


There is no doubt that the President's stated openness to medical liability reform legislation has put the issue “in play” . . . But it is too early to be very optimistic that the House, Senate and White House will find enough common ground for meaningful medical tort reform to be enacted in the next two years. Each of these institutional players has different incentives which will influences how they approach this issue.

The Republicans in the House want to quickly satisfy their constituents who have been pressing for tort reform for 15-20 years--which to most of them means hard caps on non-economic damages. Yet the Senate Democratic Leadership is known to be quite sympathetic to the personal injury lobby, which is adamantly opposed to all tort reform, particularly caps on damages.  

So there the issue sits: in stasis. Obama mentioned med mal in 2011, but his position today--and prospects for any reform--are the same now as they were in January of last year, when he didn’t mention med mal at all.

So the Serious Medicine lesson here is that absent a profound change in thinking, as opposed to mere partisan shuffling, there’s little prospect for med mal reform. Even if Republicans were to win the Senate and the White House in 2012, there’s no reason to think that the med mal situation would change; after all, from 2003 to 2006, when Republicans controlled everything in Washington, nothing happened med mal-wise.

We can conclude: If malpractice reform is merely seen as being for the convenience and enrichment of doctors, drug companies, and medical equipment makers--as is often said--the goal will never be seen as being so important as to justify overturning the status quo.

What needs to be understood, therefore, is that the real issue is not so much what the trial lawyers do to doctors, but rather what the trial lawyers do to the prospect of Serious Medicine--the medicine that saves lives and bends the cost curve. That is, if malpractice suits simply add $100,000 or so to every doctor’s annual costs, well, in the minds of most Americans, that’s acceptable.

Yet if GlaxoSmithKline pays out $6 billion or more for Avandia, as has been reported, that's most likely the end of diabetes research for GSK, and for many other firms, too.   Circling trial lawyers are not going to be deterred by any sort of mediation project--they want the money.   In addition to caps on damages and limits on contingency fees, the needed reform for pharmaceuticals and medical equipment is this: If the FDA approved the product, the maker of that product can't be sued.   The FDA doesn't have to approve anything, but if it does, then whoever makes the product in good faith shouldn't be subject to a lawsuit--period.

In fact, the real cost of medical torts--and it is enormous to the point of incalculability--is the paralysis of scientific progress across the medical sector, because nobody wants to take possession of information that could later inculpate them, in some perhaps unforeseen way, in a future class-action suit.

So what’s the way out? The way out is circuitous: Ultimately, we have to get to cures, because good health is both better, and cheaper, than sickness. But to get to there, to get to better medical outcomes in the long run, we have to change the legal system in the short run. Changes in the legal system will encourage innovation, information-sharing, and mass production of new medical products. That’s a bright prospect that will entice ordinary Americans who are at present indifferent spectators to the ongoing brawl between opponents and proponents of malpractice reform.

Here’s the bottom line: Advocates of legal reform must therefore become advocates of a comprehensive strategy for Serious Medicine, because only by making their argument larger and more promising can advocates make a persuasive case to Middle America. Cures are not just a good idea, cures are a big idea--the kind of idea that blows away the pecuniary interest of trial lawyers and their political grantees. And so it’s that big idea of cures that must be invoked in favor of med mal as part of a Serious Medicine Strategy. Anything less simply won’t get the job done.

As the late management guru Peter Drucker observed, as a general rule, a new idea has to be ten times better than the old idea to be accepted and to replace the old idea. And so we can see what has gone wrong with med mal over the years: People might think med mal is a good idea, but they don’t see med mal as ten times better than the status quo, and so reform goes nowhere. What med mal reformers need to do is link reform to the larger issue of cures. Cures, that is, as both a humanitarian goal and a money-saving strategy. Seen that way, cures are a ten-times-better idea than John Edwards & Co. Present the American people with a choice--what do you want: Cures for killer diseases? Or more trial lawyers flying around in private jets?

If we cure diabetes, for example, we as a nation won’t spend $200 billion caring for diabetes. Although diabetes is often linked to obesity, about a quarter of diabetes patients in America were born with the condition. And even for those who can be said to be “at fault,” the plain reality is that we are paying for their care. So it makes sense for us, as part of our Serious Medical Strategy, to work with those seeking to reduce obesity. And to applaud, for example, the fitness efforts of Michelle Obama.

Moreover, since we have developed a commercial culture which is seemingly dedicated to fattening us up--candy companies, for example, spend their time figuring out new methods of mixing sugar and salt in ways that are irresistible to our lizard-brain food reflexes--we need to develop equally shrewd counter-measures. And yet here again, the trial lawyers are a major obstacle to progress. If the lawsuits keep coming against weight-loss products--Fen-Phen awhile back, Zenical more recently--then we're stuck in a repetitive get-fat rut. (What’s needed, of course, is personalized medicine, so that those relatively few who are at risk from Fen-Phen, or Zenical, or anything else are warned away. And yet such personalization won’t happen, Jim Wootton explains, so long as the trial lawyers are able, through the legal discovery process, to comb through every medical record, looking to make a new class-action lawsuit.)

So once again, the way out is medical science--cures. The idea of cures, that is, as an articulated national goal, the sort of articulation that’s been missing from the debate for the past two decades, as we focused instead on health insurance. A Manhattan Project-like focus on cures would necessitate the sweeping away of the trial lawyers. During World War Two, nobody sued the A-bomb project.

The quest for life-improving, cost-saving Serious Medicine should of course be a bipartisan effort.  This is, President Obama should want to cure diabetes, not only because he is a compassionate man but also because he wants to make healthcare--and Obamacare--affordable. But to achieve those goals, Obama will have to do more than talk the talk of med mal; he will have to walk the difficult walk of enacting genuine legal reform.

Perhaps it’s time to recall the old Jack Benny routine, “your money or your life.” In the comedian’s case--Benny portrayed himself as an epic tightwad--the choices of “money” or “life” were almost interchangeable. Even as a menacing robber threatened him, Benny answered, “I’m thinking, I’m thinking.” In the real world, of course, life is more important. But what if we knew that we could have both: money and life? That is, what if we could come to see that cures are cheaper than sickness-and cheaper than care? That has been true for polio, and smallpox, and tuberculosis, to name three diseases that we have mostly eliminated. So why not take the same cost-effective approach to diabetes, Alzheimer’s, and cancer?

Yes, such cure would be a great challenge, but the reward would be much greater. It is simply inconsistent with the work of the nation to let legal pirates and plunderers continue to hollow out our healthcare industry--and our own health. The status quo is costing us both our money and our lives.