Home > News > Tort reform would reduce deficit by $54 billion. Now, how about this idea…

Tort reform would reduce deficit by $54 billion. Now, how about this idea…

So, here we are.  Tort reform.  I have been saying we need tort reform from the very beginning, but the Dems are dead set against it.  Well, look at this.  It would actually REDUCE the deficit by $54 billion.  And reduce costs by over double that.  Instead, the Dems want to introduce an experiment that will cost us almost $900,000,000,000

Tort reform:  SAVES us $110 billion over 10 years

Dem plan:  COSTS us $890 billion over 10 years (yeah, I’m sure that’s accurate)

My plan:  SAVES us $2 billion over 10 years and covers everyone who needs it.  What is my plan?  Just buy these people a minimum health care plan for about $41 per month (I can get a plan like that from Aetna)  $41 per month for 10.6 million people who can’t get any other coverage and can’t afford it.  Over 10 years, that costs us $52 billion.  Add tort reform and BAM, everyone is covered, deficit negative, and no new taxes.

Lost in the shuffle of the CBO scoring of Max Baucus’ non-existent bill on the health

care overhaul system this week is another analysis by the CBO on tort reform.  According to CBO director Douglas Elmendorf on his blog, the CBO studied the impact of both the reduced cost of litigation and the elimination of defensive medicine that would result with tort reform.  Elmendorf says that tort reform would reduce the federal deficit $54 billion over the next ten years, more than the fee Baucus plans to charge insurers for the privilege of existence (via MarySue at Ruby Slippers):

CBO now estimates that implementing a typical package of tort reform proposals nationwide would reduce total U.S. health care spending by about 0.5 percent (about $11 billion in 2009). That figure is the sum of a direct reduction in spending of 0.2 percent from lower medical liability premiums and an additional indirect reduction of 0.3 percent from slightly less utilization of health care services. (Those estimates take into account the fact that because many states have already implemented some of the changes in the package, a significant fraction of the potential cost savings has already been realized.)

Enacting a typical set of proposals would reduce federal budget deficits by roughly $54 billion over the next 10 years, according to estimates by CBO and the staff of the Joint Committee of Taxation. That figure includes savings of roughly $41 billion from Medicare, Medicaid, the Children’s Health Insurance Program, and the Federal Employees Health Benefits program, as well as an increase in tax revenues of roughly $13 billion from a reduction in private health care costs that would lead to higher taxable wages.

But that’s not the end of the savings, either.  A 0.5% reduction in health-care costs would mean $11 billion in savings per year overall, with roughly 40% of that benefiting the federal government in Medicare and other federal program costs.  That amounts to a whopping $110 billion in cost savings over ten years to the entire medical industry, which would help keep premiums in check for consumers.

Hot Air » Blog Archive » CBO: Tort reform would reduce deficit by $54 billion

  1. Mark Baird
    October 11, 2009 at 10:44 pm

    So we waste our time and discussion on tort reform for how much of a savings. Maybe this is about cutting the funding of Democrats.

    Following is a GAO report on medical malpractice and could not find any evidence to substantiate the claims of lawsuits impacting health care costs, access to health care or defensive medicine (with one possible lose connection relating to OBGYN). But of course you will not see this report on any media outlet swinging left or right.


    Remember the CBO report regarding the cost of a single payer system that we all grasped to support our arguments against a single payer system…

    Well, there is the CBO report which had this to say about tort reform:

    “But even large savings in premiums can have only a small direct impact on health care spending–private or governmental–because malpractice costs account for less than 2 percent of that spending.”


    And of course there is Tillinghast-Towers Perrin (one of the largest in the world that provides risk management for the insurance and reinsurance industry).

    According to the actuarial consulting firm Towers Perrin, medical malpractice tort costs were $30.4 billion in 2007, the last year for which data are available. We have a more than a $2 trillion health care system. That puts litigation costs and malpractice insurance at 1 to 1.5 percent of total medical costs. That’s a rounding error. Liability isn’t even the tail on the cost dog. It’s the hair on the end of the tail.

    Of that 1 to 1.5 percent what portion of that is “frivolous”?

    http://www.towersperrin.com/tp/getwebcachedoc?webc=USA/2008/200811/2008_tort_costs_trends.pdf (Page 10)

    And then of course the report from Towers Perrin that states that the total tort cost in the US is 2% of the GDP. What percentage of that is “frivolous” and of that percentage what percentage is “frivolous” corporate lawsuits. So how much are “frivolous” lawsuits driving up the cost of everything? Maybe less than 2 cents on the dollar or maybe even less the 1 cent on the dollar?

  1. October 30, 2009 at 10:53 pm

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