John C. Goodman

Moreover, in forcing providers to focus on malpractice, we are encouraging them to do things that may make the overall problem much worse. To protect themselves from lawsuits, for example, doctors may order more blood tests and other procedures. But if those tests have potential adverse side effects, the risk to the patient may go up even as the risk of malpractice lawsuits goes down.

Fortunately, there is a better way. For the money we are now spending on a wasteful, dysfunctional malpractice system, we could afford to give the families $200,000 for every hospital-caused death. We could give every injury victim an average of $20,000 — with the actual amount varying, depending on the severity of the harm.

How exactly could this work? We propose to allow patients a voluntary, contractual, no-fault alternative to the malpractice system. In return for forgoing their common law rights to litigate at the time of entry into the health care system, patients could be assured that if anything goes wrong they get a check — without lawyers, without depositions, without judges and juries — no questions asked.

Further, if patients want to pay additional premium and top up their compensation — doubling or quadrupling the amount — they would have that option as well.

Providers would soon realize that every time they avoid an adverse death, they save $200,000. They would come to view every life as equally valuable — whether potential cause of harm is negligence, preventable procedures not taken, or simply an "act of God."

To pay off the claims, hospitals would purchase insurance just as they purchase malpractice insurance today. In this way insurers would become the monitors of hospital quality and through their premium charges they would reward and punish doctors and hospitals, based on their experience. Those with higher adverse event rates would pay more. Those with lower rates would pay less.

This proposal would take quality-of-care issues out of the hands of the legal system and put it in the hands of people who are best able to do something about it.

John C. Goodman

John C. Goodman is President of the Goodman Institute and Senior Fellow at The Independent Institute. His books include the widely acclaimed A Better Choice: Healthcare Solutions for America and the award-winning Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts.”