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Letter to the Honorable Orrin G. Hatch 1 (October 2009)

handle is hein.congrec/cbo9359 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Douglas W. Elmendorf, Director U.S. Congress Washington, DC 20515 October 9, 2009 Honorable Orrin G. Hatch United States Senate Washington, DC 20510 Dear Senator: This letter responds to your request for an updated analysis of the effects of proposals to limit costs related to medical malpractice (tort reform). Tort reform could affect costs for health care both directly and indirectly: directly, by lowering premiums for medical liability insurance; and indirectly, by reducing the use of diagnostic tests and other health care services when providers recommend those services principally to reduce their potential exposure to lawsuits. Because of mixed evidence about whether tort reform affects the utilization of health care services, past analyses by the Congressional Budget Office (CBO) have focused on the impact of tort reform on premiums for malpractice insurance. However, more recent research has provided additional evidence to suggest that lowering the cost of medical malpractice tends to reduce the use of health care services. CBO has updated its estimate of the budgetary effects of proposals for tort reform to reflect that new information. Background on Tort Reform Under current law, individuals may pursue civil claims against physicians and other health care providers for alleged torts-breaches of duty that result in personal injury. The system has twin objectives: deterring negligent behavior on the part of providers and compensating claimants for losses they incur (including medical costs, lost wages, and pain and suffering) resulting from injuries that occur because of negligence. Many observers have proposed nationwide curbs on medical malpractice torts. As CBO outlined in its 2008 report Key Issues in Analyzing Major Health Insurance Proposals, reforms to the tort system generally fall into one of two categories: caps on the payments that may be made and limits on who may be found liable. Broader reforms, such as the establishment of specialized courts or different standards of evidence, have also been discussed, but they have not featured as prominently in legislative proposals. Caps on tort awards could take a number of forms. One common proposal would limit awards for noneconomic damages, such as pain and suffering. Other proposals would limit the amount awarded for punitive damages, or the situations in which a plaintiff could receive awards for punitive damages, or both. Still other proposals would cap the contingency fees that claimants' attorneys could collect as a percentage of the total www.cbo.gov

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