You know the joke. A passerby finds a man looking for his keys under a streetlamp. He asks the man where he lost them (actually a stupid question, when you think about it; but necessary to the joke). "Over there," replies the man. "Then why are you looking over here?" asks his insatiably curious interrogator.

"Because the light is better here."

And you know its myriad applications to the varieties of human folly. Well, make that a myriad and one. It's hard not to chuckle at the Republican party as they insist on looking for the key to Health Care reform, not in the health care industry, but in the gawdy glare of blame for their pet scapegoat: lawyers.

The fact that the Republican notion of an "alternative" reform bill seizes on usual suspects rather than actual culprits is less a matter of fidelity to fatcats -- as too many liberals are too quick to charge -- than it is simply the dogmatic doldrums of an unhappy minority. An alternative has to be an alternative. But with Americans demanding progress, and Democrats defining it, there's not much for the Republicans to offer but a plate of their favorite leftovers.

Health care reform has been such a loser for the Republicans that they are even betrayed by their own breakthroughs. It was Republican congressmen who made the case recently that over one-third of America's uninsured population are young people, shrugging off the need for insurance in the bloom of health. That was a solid blow against the Democrats' argument that 46 million Americans are desperate for insurance they can't afford. But it also had a logic that has to be followed through. Youth is fleeting. The carefree kids who shun insurance today are heading for the trap of the pre-existing condition exclusion that is standard in insurance contracts. The longer they delay, the more likely they are to develop some health problem that their eventual insurance carrier can then refuse to cover. The pre-existing condition trap is the reason why "fully insured" Americans need reform just as urgently as the uninsured do.

But the Republican alternative bill lets the pre-existing condition exclusion continue to cheat insured Americans out of their money's worth -- and set up today's youth for a rude awakening.

Tort reform -- in this case, the restriction of awards in medical malpractice lawsuits -- has been around long enough that the party of old ideas can embrace it while the rest of us can observe its checkered record. The Republican case is as simple as it is oblique: a reduction in damage awards will ripple upstream to lower costs throughout the health care system. The insurance companies will save money on payouts; so the doctors will save money on insurance premiums; so you will save money on getting sick. The only people who lose are lawyers, and they deserve to suffer for not voting Republican.

The Republicans are the party of tradition, and tradition is history with the facts left out. So perhaps they can be forgiven for ignoring the fact that the history of medical malpractice tort reform does not fulfill their dream. While it has never been enacted at the federal level, the states have racked up more than three decades of experience with limits on damage awards in malpractice lawsuits.

The fact that these are the decades in which health care costs have spiralled upward does not bode well for the Republican cause. After all, the national experience is just the aggregate of the state experiences. If it is possible for tort reform to tame health care inflation, we should see the state actions making some impact on national totals.

Much as I hate to do my own research, I have not come across any study that frames the question in quite those terms. But the stats I have been able to track down do enough damage to the tort reform case to be worth laying out.

In the nature of experiments, the state record is not as smoothly linear as one would like. Through the 1980's and 1990's, a number of state laws were struck down by supreme courts. So we find some states weaving in and out of the tort reform lane through these years (Ohio, three times). Nevertheless, there is enough consistency to warrant the comparison of state efforts with national results.

As of 1987, 21 states had laws limiting awards for non-economic damages in malpractice suits. Over the next 5 years, 2 more states passed such laws, while 4 lost theirs. During this period, with 19 states sustaining limit laws, total national spending on health care rose 66.7%.

In the next 5-year period, ending in 1997, 2 more states came aboard; 1 passed through; and 1 dropped out. The total at the end of this period was 20 states. With a net difference of only 1 state limiting awards, the increase in national spending for the period mysteriously plunged to 28.8%.

The next 5-year period, to 2002, was relatively static: 1 state out; 1 in and out. Excluding states that passed limits that year, the total at the end of the period was back down to 19 states. Yet the increase in national spending jumped to 37.6%.

My stats for the states fall a few years short in the last 5-year period. But through 2005, the vogue tallied 8 new members. With Wisconsin hanging in until that year, 28 states had malpractice limits on non-economic damages as of 2005. To what avail? As of 2007, the 5-year increase in national health care spending hardly budged, at 37.3%.

Serious students of statistical investigation will snort at this grab-bag methodology. But that is, to a great extent, precisely my point: to prove a mess. The experience of 32 states with malpractice limit laws cannot be correlated with the national experience of health care cost increases. No clear pattern emerges. And so the Republican case can be answered with a question: if the actions of so many states did not have a consistent effect on national costs, what more could we expect from a federal law?

To say much more on the subject would be to repeat what others have already said, much more expertly, at websites that are easy enough to find. But a little repetition would be to their credit. The most authoritative treatment of the question has to be the 2004 study by the Congressional Budget Office, which you can read for yourself here:

http://www.cbo.gov/ftpdocs/49xx/doc4968/01-08-MedicalMalpractice.pdf

The CBO's conclusions are not unlike mine: there is less to tort reform than meets the Republican sweet spot. Since the total cost of malpractice amounts to just 2% of the nation's health care bill, the fraction shaved off of that 2% by reform would be a trifle against the magnitude of the problem. 

And a 2005 study by Amitabh Chandra, of Dartmouth College, established that damage awards in malpractice suits were rising in proportion with the general trend of health care costs:

http://content.healthaffairs.org/cgi/content/full/hlthaff.w5.240/DC1

Therefore, the amounts that insurance companies were paying out could not be the cause of the nasty spike in premiums that the companies were charging doctors. Chandra's study offers some tentative support to the CBO's speculation that insurance companies may have been gouging doctors at that time to make up for a slump in their investment income.

And in the spirit of impartiality which I have otherwise disdained in this post, I will point out this 2006 study from the American Journal of Public Health:

http://ajph.aphapublications.org/cgi/reprint/96/8/1375.pdf

The authors find that states with limit laws have experienced measurable reduction in per capita health care expenses (as distinguished from my showing here that state laws have had doubtful impact on the national total). I would call the measure fairly unimpressive -- little over 3% savings -- but then, I'm not a Republican clutching at straws of credibility. The value of this study to me is right up front in its first paragraph: a Harvard study found that only 2% of malpractice injuries lead to any legal action! So much for the bonfire of the shysters that Republicans claim has been ruining American society. 

The goal of health care reform should be the same as the goal of the health care system: the benefit of the consumer. In typical trickle-down fashion, the Republican proposal mandates benefit for corporations and providers -- and just assumes that such benefit will rub off on you and I, the humble consumers. As the Democratic proposal stands at this writing, America will still be another round or two of reform away from a system that truly delivers "the best health care in the world" to every citizen. But at least the Democrats know where the keys are. 

Copyright 2009 Charles Jolliffe