Annual Medical Liability Costs Surpass $50 Billion

Account for more than 2 percent of total health care spending in the United States
By Eric Metcalf
HealthDay Reporter

THURSDAY, Sept. 9 (HealthDay News) -- The annual costs of the medical liability system in the United States total more than $50 billion, which accounts for a relatively small but non-trivial portion of total health care spending, according to an article in the September issue of Health Affairs.

Michelle M. Mello, J.D., of the Harvard School of Public Health in Boston, and colleagues discuss their calculations to estimate the costs of the medical liability system. These include indemnity payments to patients who file malpractice claims; administrative expenses, including attorney fees; and costs of defensive medicine. However, they didn't include the emotional costs for physicians from being sued, or the potential social benefits of the liability system.

The authors write that the cost of indemnity payments was $5.72 billion in 2008 dollars, administrative expenses were $4.13 billion, and the cost of defensive medicine was $45.59 billion. The total cost of the medical liability system was $55.64 billion, or 2.4 percent of total national health care spending in 2008.

"Reforms that offer the prospect of reducing these costs have modest potential to exert downward pressure on overall health spending. Reforms to the health care delivery system, such as alterations to the fee-for-service reimbursement system and the incentives it provides for overuse, probably provide greater opportunities for savings," the authors conclude.

Two co-authors disclosed receiving consulting fees from the American Medical Risk Insurance Company.

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