One of the worst features of the American health care system is the sorry state of medical malpractice law. Fewer than 2 percent of injured patients ever file a lawsuit. Of those that do, only one in 15 receives compensation. More than half of every dollar goes to cover the cost of litigation, rather than to the injured and their families.
Ironically, the medical malpractice system is inordinately focused on whether someone was at fault when an injury or accident occurs. Of the estimated 187,000 deaths and 6 million injuries that occur in hospitals each year, about one in four are considered negligent (malpractice). Another one-fourth (such as certain types of infections) is judged to be "preventable," even though no one is guilty of negligence. Almost half of adverse medical events are "acts of God" — no one was at fault and there is no obvious way of preventing them.
Here's the problem. When we focus exclusively on malpractice and do nothing about the other categories of adverse events, doctors will do things that reduce malpractice events but increase the risk of some other type of injury. For example, doctors can reduce their malpractice risk by ordering more tests. But each of these tests carries a risk of hospital-acquired infections and other adverse consequences.
Fortunately, there is a better way. Forget for a moment who is to blame or who is at fault. Also, put aside all concerns about whether events are preventable or not. Let's compensate all patients any time an injury or death occurs in a hospital for any reason other than the condition that brought them to the hospital in the first place.
For half of the estimated $300 billion our nation spends on the medical malpractice system, we could afford to pay $200,000 for every death that occurs due to an adverse event and an average of $20,000 for every injury (with the actual amounts varying based on the severity of the injury). The system would be voluntary, but many patients would willingly forgo the long, drawn-out and expensive tort process in exchange for a low-cost, efficient system where they generally know what they will get if something goes wrong.
John C. Goodman is President of the Goodman Institute and a Senior Fellow at The Independent Institute. He is the author of the widely acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts.”