Are Malpractice Payouts Adding to Rising Health Care Costs?

There is no end to the number of medical malpractice stories. A single dose of aspirin is billed at $25. Or a simple chest X-ray costs hundreds of dollars more at one hospital compared to another in the same town. Mounting health care costs are a concern for everyone these days, so why are costs escalating at an alarming rate?

Some researchers blame large medical malpractice settlements for draining our health care resources and increasing health care costs. But a new study of malpractice claims from 2004 to 2010 by John Hopkins researchers debunks this myth. Malpractice payments over $1 million add up to approximately $1.4 billion per year. That’s less than one percent of national medical expenditures in the United States. These types of “catastrophic” payouts often occur when a patient is killed or injured under the age of one, develop quadriplegia or brain damage, or have an issue with anesthesia, according to a study published in the Journal for Healthcare Quality.

However, the leader of the study, Marty Makary, MD, MPH, associate professor of surgery and healthy policy at John Hopkins University School of Medicine, says: “The notion that frivolous claims are routinely resulting in $100 million payouts is not true.” Instead, Makary suggests the real problem is that too many tests and procedures are being performed by physicians who fear they might be sued if they do not order them. This idea is known as defensive medicine and costs nearly $60 billion a year. Makary adds, “It is not the payouts that are bankrupting the system—it’s the fear of them.”