Peter Orszag and the Liability “Shortcoming”
There’s an interesting article this week in the journal Foreign Affairs by Peter Orszag, formerly President Obama’s budget director and now a global banking executive at Citigroup. Mr. Orszag wrote an in-depth retrospective on the development and passage of the new health reform law and what he sees as its strengths and weaknesses in addressing the need to curb healthcare cost growth.
The article, “How Health Care Can Save or Sink America,” covers a panorama of issues, but one of the most striking provisions concerns medical liability reform or, more precisely, the lack of it in the Affordable Care Act. Mr. Orszag calls it the measure’s “biggest substantive shortcoming.”
To critics who say that the current liability climate does little to raise costs, he writes that you have to look beyond Congressional Budget Office estimates and current academic studies. He says, “What this literature largely misses, however, is the fundamental problem with the laws’ standard of ‘customary practice’ – the norm that protects doctors if they can be found to have treated their patients the way most other doctors in the area do. This basis for malpractice creates a strong contagion effect among doctors, because a doctor’s legal liability is minimized by doing what the doctor down the hallway is doing.” In other words, there is a huge multiplier effect found in defensive medicine practices, physicians ordering more tests and procedures than may be medically necessary, because that’s what other doctors are doing to protect themselves against possible litigation, thus becoming the ‘customary practice.’
Mr. Orszag’s remedy is “provide a safe harbor for doctors who follow evidence-based guidelines. Under this approach, a doctor would not be held liable if he or she followed the recommended course for treating a specific illness or condition under guidelines put forward by professional associations such as the American Medical Association or the Institute of Medicine.”
The Healthcare Leadership Council and other organizations concerned with the impact the current liability climate as on both costs and healthcare quality have been exploring a policy direction similar to the one Mr. Orszag outlined in his article. We have been receiving a promising reception from members of Congress intrigued by the possibility of tying liability reform to the usage of health information technology and the practice of evidence-based medicine.
I applaud Mr. Orszag’s candor on the liability issue. He also wrote, “By failing to move forcefully in this direction, the health reform act missed a major opportunity.” I would like to believe the opportunity still exists to build a bipartisan majority on Capitol Hill in favor of common sense liability reforms.
(The link above takes readers to the Foreign Affairs article. You must, however, register with Foreign Affairs in order to view the article in its entirety.)
