The Congressional Budget Office (CBO) reports that reforming some aspects of medical malpractice law would reduce the federal deficit by $54 billion over the next ten years. The CBO analysis was in response to a proposal from Sen. Orrin Hatch, (R) Utah, that would cap non-economic damages on medical malpractice claims against doctors and health practitioners. "I think that this is an important step in the right direction and these numbers show that this problem deserves more than lip service from policymakers," Mr. Hatch said.
According to the analysis the reduction is split between lower medical malpractice premiums and slightly less use of healthcare services. The reforms would save the federal government about $41 billion over the next decade, primarily in Medicare spending. And the reduction in private healthcare spending would increase wages and bring in an additional $13 billion in taxes over 10 years.
CBO Director Douglas Elmendorf wrote: "CBO has updated its analysis of the effects of tort reform to include not only direct savings from lower premiums for medical liability insurance but also indirect savings from reduced utilization of health care services. Many analysts surmise that the current medical liability system encourages providers to incrase the volume or intensity of the health caer services they provide to protect themselves against possible lawsuits."