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Medical Malpractice Costs Top $55 Billion Annually

September 7, 2010

Even without factoring insurance premiums into the equation, the costs of medical malpractice liability costs the American healthcare system more than $55 billion annually, according to a new study published Tuesday in the journal Health Affairs.

A team of researchers, led by Harvard School of Public Health (HSPH) law and public health professor Michelle Mello, found that “overall medical liability system costs, including defensive medicine, are estimated to be $55.6 billion in 2008 dollars, or 2.4 percent of total health care spending.”

Most of that spending, according to a Reuters report, came from those so-called ‘defensive’ procedures, which include extra tests and scans performed in order to confirm diagnosis. Administrative costs, payments to plaintiffs, and lawyer fees also made up a sizable portion of the spending, according to Mello and her team.

According to information obtained from a September 7 article by Peggy Peck, Executive Editor of medical news website MedPage Today, $45.59 billion of the total were labeled as ‘defensive medicine costs’ and included both hospital and physician services.

Indemnity payment made up $5.72 billion of the sum (including $3.15 billion for economic damages, $2.4 billion for non-economic damages, and $0.17 billion for punitive damages), while things like defense attorney fees and other administrative expenses added up to $4.13 billion.

“Physician and insurer groups like to collapse all conversations about cost growth in health care to malpractice reform, while their opponents trivialize the role of defensive medicine,” Amitabh Chandra, a professor of public policy at Harvard’s Kennedy School of Government and a member of the research team, told Reuters on Tuesday.

“Our study demonstrates that both these simplifications are wrong–the amount of defensive medicine is not trivial, but it’s unlikely to be a source of significant savings,” Chandra added.

Joining Mello and Chandra in the study were Atul A. Gawande, an associate professor of surgery at Harvard Medical School and Brigham and Women’s Hospital as well as an associate professor in the Harvard School of Public Health’s Department of Health Policy and Management, and David M. Studdert, a professor at the University of Melbourne School of Law and School of Population Health, in Carlton, Victoria, Australia.

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