Customer Reviews

The Medical Malpractice Myth

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This book is a model for what social science can do, in four ways.
First, it takes on an important topic--one that has generated incredible heat in the popular press and in political circles.
Second, it takes an entirely fair perspective. Old fashioned as it may seem, the author is actually interested in finding out the truth about the med mal problem.
Third, it surveys the available literature in the social sciences, reads and cogently digests every significant study, and assess the merits of each. The author is not an economist, but his understanding of economics and his sober and astute assessment of the quantitative AND qualitative evidence is terrific.
Finally, the book does all this with a clarity and cogency of writing that make it eminently readable. This is not a dull slog through endless tables and figures. While the empirical evidence is discussed, and there is even some attention paid to issues of methodological reliability and so on, the prose is lucid and no one interested in the topic will find it tough going in the least.
In fact, no one interested in the topic--from doctor to lawyer to politico--can afford not to read this book. If only more social science were this good, the world would be a better place.

This is a copy of my review from the Insurance Scrawl blog, http://www.insurancescrawl.com :

Nearly 100,000 killed last year, the same rate as in the ongoing, repellent genocide in Darfur. But this figure is the estimate of the number of Americans who die annually due to medical-malpractice errors.

That's one of the key points emphasized in the trenchant new book by Professor Tom Baker, The Medical Malpractice Myth (2005). Baker's slim, accessible, engaging, and well-written volume argues that the prevailing myths concerning medical malpractice and doctors' liability-insurance premiums are the stuff of urban legend.

One of the key contributions of the book is to assemble in one handy place the current literature about the amount of medical malpractice, the number of med-mal claims, the settlement/judgment costs and transaction costs of these cases, insurance premiums, and ups and downs in insurance markets. Baker argues convincingly that there is an epidemic of medical practice in the United States, nearly 100,000 preventable deaths annually, with only a fraction of claims being pursued (and most nonmeritorious claims are resolved before trial and often are dropped). The number of deaths annually exceeds automobile-related and workplace-related deaths combined, yet the medical-liability insurance premiums in toto are a small fraction of the premiums collected for auto and worker's comp.

Baker approaches his study with an open mind and transparently - he shows the reader the evidence, the bases for his interpretation of the evidence, and honestly identifies where the data are uncertain, limited or unclear. The book is quite refreshing in this regard, given the jeremiads one usually sees in these discussions. Baker assembles the evidence that the pricing spikes we see in med-mal insurance are straightforward reflections of the insurance cycle and are not driven (much) by the tort-litigation side. As he writes, "the two most recent medical liability insurance crises did not result from sudden or dramatic increases in medical malpractice settlements or jury verdicts." (p. 53-54) Baker's analysis of the mechanisms of insurance markets and the insurance cycles is consistent with the analyses of Warren Buffett and Richard Stewart, even though most people seem to uncritically adopt the myth of actuarial pricing of insurance.

The Medical Malpractice Myth discusses the evidence of the impact on the supply of doctors and the costs of defensive medicine, arguing ultimately that med-mal claims have little effect. Baker takes the normative position that medical-malpractice claims are good for the system and that the legal system adequately sifts out nonmeritorious claims. Further, Baker tries to gauge the overall costs of the tort system, arguing ultimately that med-mal victims are undercompensated (especially bearing in mind the large majority of potential plaintiffs that do not seek recompense).

Baker further offers his suggestions for reforming the liability, compensation, and insurance systems for medically caused injury. Baker's objective is to get the conversation started. The book is a plea - but not for his proposed reforms per se but rather for an evidence-based discussion of the issues.

Professor Baker bravely went into hostile territory recently at a forum sponsored by the American Enterprise Institute to discuss his book. The forum is available online (including video), and Baker's AEI presentation, the critiques of the discussants, and Baker's rebuttal provide a good overview of the facts, issues, and areas for further research and discussion. I endorse the observation of Professor Martin Grace, one of the AEI "discussants" and a fellow blogger, that it would be profitable to understand better the impact of physician-owned mutual insurance companies on the med-mal insurance market and loss-prevention (i.e., malpractice-injury avoidance) efforts.

Much of Baker's argument is confirmed by the Insurance Information Institute's most recent issue update on medical malpractice (December 2005), which to its credit collects much recent data and leavens it only slightly with its political perspective. In what to me seems as ironic understatement, the III cites a recent Missouri study that "found that the leading grounds for malpractice awards in the state in 2004 were medical errors in diagnoses and surgery." Like Baker, the III cites a study that only one in eight people who suffered from medical-malpractice injury filed a claim. The III further echoes Bush Administration experts who underscored the need to identify and discipline incompetent doctors and encourages risk-management by doctors and hospitals, including requiring doctors to study medical-malpractice prevention and mandating reporting of medical errors (also strongly endorsed by Professor Baker). Furthermore, the III cites a study by an insurance-consulting firm that predicts that the medical-malpractice insurance sector will be profitable in 2006; in 2004 the combined ratio for med-mal insurers was 109.2, meaning that the industry needs an investment return of 9.2 percent on the premiums collected in order to turn a profit. Baker argues that the data show that insurers rarely pay claims that do not substantially indicate malpractice and reports that claims take roughly seven years from premium collection to claim payment, thus giving insurers the opportunity to make their 9 percent investment return (total, not annualized) to be profitable.

It's easy for me to recommend this book, especially to policymakers and their staffs, stakeholders including doctors and their professional organizations, as well as to lawyers, insurers, and laity interested at all in the topic. The Medical Malpractice Myth is iconoclastic but calm and dispassionate in tone. It is informative, easy to read, and short (180 pages). It's not meant to the be the last word on the subject, but rather aims to start a new conversation, one in which you'll be equipped to participate once you read Baker's cogent analysis.

This book is a must read for anyone who thinks that tort reform is a good idea. We've tried it in California. The effect has been to effectively immunize health care providers from liability by closing the courthouse door to claims of medical negligence. There is no incentive to improve the health care system or to address the systemic problems that cause most injuries and deaths.

Medical negligence is a fact. Our government estimates that as many as 98,000 people per year die from preventable medical errors. The cost of these errors is enormous and, when our civil justice system is crippled by tort reform, those costs are often shouldered by the public through increased taxes and fees.

Tort law is designed to do two things: to provide just and reasonable compensation to people injured by the negligence or carelessness of another and to discourage behavior likely to result in injury. When we "dis-incentivize" good medical practices by immunizing health care providers, we make it more, not less, likely that people will be injured as a result of medical errors.

There is no evidence of which I am aware that these reforms have benefitted anyone other than big insurance companies. In California, it is increasingly difficult or impossible for patients who are injured by medical errors to receive "just and reasonable" compensation for the harm caused. The cost of litigating such cases is prohibitive in light of the 32-year-old MICRA cap which limits damages to $250,000 in most cases - even those involving gross negligence or the death of a child.

I just bought three copies of this book to send to friends who are doctors. Unlike a lot of the literature and journalism surrouding medical malpractice, which is full of hyperbole and inaccuracies, this book gives concrete information and a coherent argument about why doctor's malpractice premiums are so high and what can be done about it. Baker looks at all the players - insurance companies, doctors, hospitals, patients and legislators - in his analysis of the situation. The book is also extremely well written, with lots of interesting and shocking anecdotes, and makes a complex topic easy to understand. I highly recommend this book to anyone interested in this topic. It should be mandatory reading for any legislator contemplating tort reform.

As a current medical student and son of a malpractice lawyer, I found this book intriguing and insightful. His cocnlusions are sound and based on reputable studies conducted by MEDICAL SCHOOLS and PEER-REVIEWED JOURNALS with strong ties to healthcare (such as the New England Journal of Medicine). He in no way attacks physicians as a whole. In fact, he devotes a good portion of the book entirely to reform that would PROTECT physicians. His book represents an easy-to-read, fair treatment of malpractice in healthcare. For the open-minded and honest physician/medical student, this book will help you rise above the malpractice myth that is almost universally held by physicians/medical students and completely contested by malpractice attorneys. Very objective and data centered.

Baker begins by putting malpractice insurance expenditures into perspective. In 2003, doctors, hospitals, and other health professionals paid only about $11 billion in medical malpractice premiums - out of $1.5 trillion spent on health care, and in comparison to $116 billion Americans paid for personal auto liability and no-fault insurance.

Part of the "problem" is its unpredictable and cyclical nature. Medical malpractice payouts are significantly influenced by a few cases drawn out over several years - thus, when they occur insurers can find themselves needing to temporarily raise rates to recoup losses. Another problem is that doctors bear most of the costs of medical liability, despite receiving only about 15% of health care revenues. And finally, the issue focuses primarily on a few specialities - eg. OB-GYNs.

As for the costs of defensive medicine, early 1990s research by a congressional group found doctors reporting defensive they would take extra defensive medicine costs less than 0.01% of the time in response to various situations posed to them, though at a much greater rate in some situations (eg. when heart disease or brain surgery was involved). These results have been inappropriately generalized, and subsequently largely contradicted by the original authors since concluding that managed care eliminated the impact without increasing malpractice awards. The number of doctors supposedly leaving the profession to avoid malpractice costs has also been overstated (eg. they simply moved to another area), but malpractice rates have led to a decline in part-time practitioners in high-risk areas - a good thing given that malpractice rates are inversely related to practice volume.

Baker believes that malpractice suits are beneficial, citing anesthesiologists' working identify major sources of malpractice awards and thereby significantly reducing errors and holding insurance rates constant over a number of years. He believes that the real medical malpractice problem is that there are too few claims - most instances where patients are harmed due to medical errors do not result in lawsuits, thus not creating incentive and feedback to improve. Therefore, Baker offers several suggestions for improving the rate of lawsuits.

Baker does not go on to look at wastes in other areas of health care. Dr. Relman, however, does. He estimates ("A Second Opinion" that 40-45% of health care expenditures are waste - excess administration, profit, and care that is either not needed or of doubtful value. Others estimate that the new Medicare drug benefit alone adds about $70 billion/year in wasted costs through extra overheads and lack of competitive bidding.

This is an excellent analysis of the controversy over increasing medical malpractice liability premiums, and the debate about "tort reform" in medical malpractice law. Baker clearly explains how the liability insurance industry works -- a little-understood piece of the puzzle -- and has a clear grasp of both the statistics and politics surrounding medical injury. Highly recommended. -- Rob Leflar, University of Arkansas

Peter Siegelman (below) got it absolutely right.
This book has stimulated a great deal of discussion in my Sociology of Law class. It carefully explores--and explodes--the myths that guide "tort-deform" policymaking. In an era when "truthiness" abounds, my students are fascinated with this data driven logical analysis of why recent policy changes are making the problem worse. Ignoring the real costs of medical practice offends many legal theorists, from Richard Posner to Law & Society to Ralph Nader. Baker explains why in a clear, logical voice.

As a personal injury attorney for the past 34 years I was delighted and relieved to read Tom Baker's The Medical Malpractice Myth. The fact that there is no Medical Malpractice litigation crisis was not news to me, nor was the fact that there is a substantive malpractice crisis - although I was not aware of its extent.
However, I did not know the specific manner in which the insurance industry created the myth of the "malpracice crisis" and I had not thought through any approaches to deal with the malpractice myth or the malpractice crises.
Professor Baker's work is vitally important, and should be mandatory reading for anyone who needs to understand the realities of the relationship between the law, medicine,the insurance industry and our legislative body's.
E. R. Fussell

If MD's & AMA would read this excellent book & follow its advice, the US would be a better country. Until they do (if they ever do), you need to read it & be alerted to a widespread kind of problem with US media & medicine. That, too, would move this nation ahead.