Bush: Secondly, he says that medical liability costs only cause a 1 percent increase. That shows a lack of understanding. Doctors practice defensive medicine because of all the frivolous lawsuits that cost our government $28 billion a year.
$28 Billion a Year?
Bush recycled his claim that lawsuits force physicians to practice "defensive medicine" that adds substantially to medical costs, and increases federal spending for health-care programs by $28 billion a year. We de-bunked that one back in January.
As we said then, both the General Accounting Office (recently re-named the Government Accountability Office) and the Congressional Budget Office criticize the 1996 study the Bush administration uses as their main support for that claim. These nonpartisan agencies suggest savings from passage of limits on malpractice damages --- if there are any savings at all -- would be relatively small.
Bush's claim rests mainly on a single 1996 study by two Stanford economists who said caps on damage awards could hold down overall medical costs by 5% to 9%. They studied heart patients who were hospitalized, compared costs in states with and without limits on malpractice lawsuits, and then projected their findings to the entire health-care system.
But both the GAO and the CBO questioned such a sweeping conclusion. When the CBO attempted to duplicate the Stanford economists methods for other types of ailments they found no evidence that restrictions on tort liability reduce medical spending.