Sen. Coburn Embraces GOP Effort To Voucherize Medicare, Exaggerates Defensive Medicine Costs

July 01, 2011 1:17 pm ET — Jamison Foser

Sen. Tom Coburn

In an interview with Medscape, Sen. Tom Coburn (R-OK), who has introduced legislation to cut $600 billion from Medicare by raising the retirement age and increasing premiums, endorsed the House Republican plan to turn Medicare into a voucher system

I fully embrace what Paul Ryan is trying to do. ... I am encouraged that Paul Ryan would put that out. You hear all the political clamor about it, and they are going to run on it during the next election, but it really makes sense. It's untruthful to say that we are going to continue Medicare the way it is. It isn't going to continue because the money isn't going to be there. Why not make sure we take care of those who are on the low end, make sure they have plenty of money to get what they want?

But the Ryan plan does not "make sure" people "have plenty of money to get what they want." Not even close. It dramatically increases out-of-pocket expenditures for seniors. 

Coburn also made a series of exaggerated claims about "defensive medicine costs" and the economic impact of limiting damages:

Defensive medicine costs, at a minimum, are $200 billion a year in this country. Where you have seen significant tort reform, like Texas, California, and Mississippi, what you have seen is not only have malpractice rates gone down, but also after about 2 years, you start to see practice patterns change. Oklahoma, my home state, just passed a tort change. We have been trying to do it for 25 years, and now there is a limitation on noneconomic damages for every action -- not just healthcare -- every action in our state is limited to $350,000. That is going to draw business to our state like crazy.

The actual costs of "defensive medicine" have long been a topic of contention between advocates of one-size-fits-all caps on medical liability and those who prefer to let juries and judges decide damages on a case-by-case basis. Coburn's claim, however, is unrealistically high, even by the standards of his fellow conservatives. In a 2009 Washington Times op-ed, Dr. Jason Fodeman, a former health policy fellow at the right-wing Heritage Foundation, offered one range of defensive medicine costs:

It should be noted that defensive medicine carries a hefty price tag. Amitabh Chandra of Harvard University conservatively estimates the annual cost of defensive medicine at $60 billion. Other research places the yearly cost at roughly $200 billion.

Note that Fodeman, a conservative who, like Coburn, advocates liability caps, identified $200 billion as the high end of estimates of defensive medicine costs. In a 2009 op-ed in the Washington Post, another conservative advocate for liability caps similarly asserted that "some estimates place the annual cost at $100 billion to $200 billion or more." So advocates for "tort reform" identify $200 billion as the high end of the estimated range of defensive medicine costs. Coburn takes that high end and asserts it's actually the floor. Coburn's "minimum" is actually many times larger than the cost several studies attribute to defensive medicine:

Longtime malpractice and patient safety researcher Michelle Mello of the Harvard School of Public Health noted that some of the figures used during the recent health overhaul debate were "quite imaginative."

So she and several colleagues set out to devise a "more defensible estimate." Their conclusion? The total cost of medical malpractice-related costs to the health care system, including defensive medicine, is about $55.6 billion per year, or about 2.4 percent of annual health care spending. Defensive medicine is about 80 percent of that total, the researchers found. [...]

A second study, whose lead author is William Thomas of the University of South Maine, found that while the practice of defensive medicine is widespread by doctors, "the incremental cost associated with this is very small. We found it to be less than one percent of the total cost managed by these physicians." Thus, savings to be gleaned from tort reform would be lower still. The study found the savings associated with a 10 percent reduction in medical malpractice premiums would be 0.132 percent.

And has noted that the Congressional Budget Office has said that capping damages wouldn't have a significant effect: "'In short, the evidence available to date does not make a strong case that restricting malpractice liability would have a significant effect, either positive or negative, on economic efficiency,' the CBO said."