The House GOP's Obamacare Replacement Package Stumbles in Florida and on Capitol Hill

A version of medical malpractice reform embraced by the Republican party — one of the ideas being considered as part of the Obamacare alternative in the House — was ruled unconstitutional by Florida's (conservative) Supreme Court.

A medical malpractice reform, championed by Republicans and passed in states including Texas and Florida, was ruled unconstitutional by the latter state's conservative Supreme Court last week. Perhaps it's a good thing that House Republicans have apparently given up on their Obamacare replacement package, of which similar reform was a key part.

On the national level, Republicans have argued that medical malpractice lawsuits have contributed to runaway healthcare spending. The subject of malpractice regulation came up in the Obamacare alternative pitched by House Republicans on Monday. According to Politico, the latest status update on the GOP alternative is that House Republicans haven't decided if they want to vote on it at all. One concern is that some of the policies the plan suggests might leave the party "open to heavy political fire from the White House and Hill Democrats." In the wake of the Florida ruling — which could of course be overturned — Republicans may be less likely to rely on reforms passed in red states. 

Given the prominence of the malpractice issue, it's worth taking a deeper look at why past reforms have been challenged in the courts. As Stephanie Mencimer of Mother Jones explained on Wednesday, a Republican-heavy Florida Supreme Court ruled against the state's 2003 medical malpractice reforms on the grounds that it did not offer equal protection to malpractice victims. Basically, the only people who benefited were the insurance companies. 

The Florida case was brought in 2005, after Michelle McCall, a 20-year-old pregnant woman, died from blood loss after being left unattended by hospital staff. After a district court awarded her family $2 million, the judge cut the award in half due to the state's cap on non-economic damages. The state's Supreme Court ruled last week that McCall's family was suffering while the healthcare and insurance industries benefitted (the less money malpractice insurers pay out, the more they get to keep). In its ruling the court wrote:

At the present time, the cap on non-economic damages serves no purpose other than to arbitrarily punish the most grievously injured or their surviving family members.

Why is there a push for malpractice reform?

Both Republicans and Democrats agree that some medical malpractice lawsuits lack merit. Republicans, and doctors, argue that extensive abuse of malpractice lawsuits lead to higher healthcare spending. Florida doctors even called it a "malpractice crisis," an idea the state's Supreme Court rejected.

Another explanation, put forth by The Los Angeles Times , is slightly more political. "Republicans love (reform) because trial lawyers give three-quarters of their political donations to Democrats. And Democrats pay it lip service because they're afraid to look like lawyer lovers."

How do malpractice suits lead to higher healthcare spending?

The theory is that doctors order a lot of unnecessary tests because they're afraid of being sued. That increases spending, which increases healthcare costs. So if you limit malpractice lawsuits, especially how much people can sue for, people will sue less, doctors will stop wasting money covering their backs, and healthcare spending will go down.

But, as The Incidental Economist pointed out in 2011, Texas capped damages at $250,000 in 2003, and Medicare payments rose faster than the national average after that. Another study found that reforms lowered healthcare spending by perhaps 0.1 percent, which doesn't justify the suffering of some patients. The whole medical liability system, is usually only two to three percent of overall healthcare spending.

And, as The New Yorker pointed out in 2009, doctors sometimes order extra tests just to increase their billings. Even after Texas passed it malpractice law, which brought the number of suits in the town of McAllen, it had the highest healthcare costs in the country. One doctor was explicit why, when interviewed by reporter Atul Gawande: "'There is overutilization here, pure and simple.' Doctors, he said, were racking up charges with extra tests, services, and procedures."

Who benefits from malpractice reform?

The way it's been enacted in Florida, only insurance companies benefit — their profits increase as they pay out less in claims. Patients are barred from litigation and higher restitutions, and doctors don't see any of the savings insurers get — malpractice insurance in Florida is still expensive. "Not only has the number of insurers providing medical malpractice insurance coverage increased," wrote the court, "the profits would probably shock most concerned.

That's one more reason for House Republicans to delay a vote on their Obamacare alternative, especially for the faction that is worried about distracting from Obamacare's problems. As a set of abstract ideas, their plan meets their political needs — namely, rebutting Democrats as November approaches. Once concrete, though, things get trickier.