The House GOP’s Obamacare Alternative Won’t Curb Health Care Costs—But It Will Enrich the Insurance Industry

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Earlier this week, the Washington Post reported in an “exclusive” front-page story that House Republicans are at long last promoting their alternative to Obamacare. According to the Post, the new plan, roundly panned, is really just a compilation of the same old health care proposals that Republicans have been floating for years, including allowing the sale of insurance plans across state lines, high-risk insurance pools, and, notably, restrictions on medical-malpractice lawsuits.

Like so many of the Republicans’ health care reform proposals, capping damages in and otherwise restricting malpractice lawsuits isn’t likely to have a big impact on health care costs, or on expanding coverage to the uninsured. Just ask the state of Florida, whose Supreme Court on Thursday overturned a law similar to the one House Republicans are pushing.

Florida passed its version of the House GOP plan in 2003, when doctors in the state were loudly proclaiming the existence of a “malpractice crisis” in which the state was plagued with an epidemic of frivolous lawsuits that were driving doctors’ insurance premiums sky-high and forcing them to leave the state. But last week, Florida’s Republican-dominated Supreme Court poked a giant hole in that hysteria. It declared that not only was that “crisis” a fiction, but that the alleged cure—caps on lawsuit damages, which are also favored by the House GOP—had done nothing but enrich insurance companies at the expense of doctors and patients, in violation of the state constitution.

The decision came in a case filed by the family of a 20-year-old woman named Michelle McCall, who in 2005 was pregnant and sought prenatal and delivery services from an Air Force family practice clinic. At the end of her pregnancy, she developed high blood pressure and preeclampsia, a dangerous condition that requires labor to be induced right away. After some missteps by the clinic, McCall finally delivered a healthy baby boy, but she lost a significant amount of blood in the process.

The clinic staff continued to bungle her care, failing to alert an OB-GYN to the blood loss and McCall’s resulting low blood pressure. Left unattended, McCall died. Her family sued the federal government, and a district court judge found that they should be awarded $2 million in compensation for McCall’s pain and suffering. But the judge was forced to reduce the award to $1 million as a result of Florida’s cap on noneconomic damages in wrongful death cases. (The law caps pain and suffering awards at $500,000 or $1 million per claimant depending upon certain circumstances, regardless of how many parties were involved, how egregious the negligence, or how badly the patient was treated.)

The Florida Supreme Court held that the law violated the state’s constitutional guarantee of equal protection, and it expressed outrage that people like McCall and her family, who had suffered a tremendous, tragic loss, should have to bear the cost of egregious malpractice to enhance the fortunes of the health care and insurance industries. The court writes that the statute restricting malpractice damages

has the effect of saving a modest amount for many by imposing devastating costs on a few—those who are most grievously injured, those who sustain the greatest damage and loss…At the present time, the cap on noneconomic damages serves no purpose other than to arbitrarily punish the most grievously injured or their surviving family members.

The Florida opinion strikes a blow at the House GOP’s longtime assertion that restricting lawsuits by people maimed and killed by incompetent doctors would bring down health care costs. In fact, the ruling slams the state law’s promoters, notably the insurance industry, for lying about the need for such caps and about their projected impact. It notes that after the state capped noneconomic damages, there were some savings. But the insurance industry never passed them on to doctors or consumers; it pocketed the profits. The court writes:

The most recent records and reports of the Florida Office of Insurance Regulation, and the annual reports of medical malpractice insurers, confirm that not only has the number of insurers providing medical malpractice insurance coverage increased…the profits would probably shock most concerned.

Indeed, between the years of 2003 and 2010, four insurance companies that offered medical malpractice insurance in Florida cumulatively reported an increase in their net income of more than 4300 percent.

Even after seeing a huge spike in profits, the insurance industry, the court notes, continued to price-gouge doctors for malpractice insurance, charging OB-GYNs in Miami-Dade County more than $190,000 a year for $1 million in insurance coverage that it charged $98,000 for in other parts of the state. This scenario is what House Republicans would like to impose on the rest of the country as its alternative to Obamacare: boosting insurance company profits while leaving the victims of malpractice to fend for themselves.


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