The news that New York faces a current fiscal year budget deficit that could reach $1 billion and a deficit for the next fiscal year that could approach $10 billion is sobering for us all. Deficits of this magnitude will create difficult choices for Gov.-elect Andrew Cuomo and the newly elected Legislature. New Yorkers already carry the highest tax burden in the country. We can no longer count upon new revenues to address this fiscal crisis. To close the deficit, all options to reduce spending must be on the table, including Medicaid and, indeed, all health care programs. New York can no longer accept the extraordinary costs incurred by taxpayers to sustain a failed system for resolving allegations of medical malpractice. This failed system has produced unsustainably high liability insurance premiums for New York physicians, among the very highest in the country, that threaten the ability of many physicians to provide the care our patients deserve and expect to receive. These enormous costs are the result of an unpredictable system for resolving allegations of medical malpractice. Many studies show that awards are given where no negligence occurred, while those truly injured by negligence often do not sue. As a result of the randomness and unpredictability of this system, physicians who treat the most high-risk patients are sued with astounding regularity in New York. Every five years, 65 percent of our neurosurgeons are sued, as well as nearly 50 percent of our surgical specialists and OB-GYNs. Even though there is no award granted in the vast majority of these suits, each case costs tens of thousands of dollars to defend and adds significantly to the extraordinary cost of liability insurance. Beyond the cost to physicians, however, is the impact of this flawed system upon the cost of all health care spending in New York. This was highlighted by Lt. Gov. Richard Ravitch in a report issued in September in which he stated, “Any serious Medicaid cost control effort requires reform of the state’s expensive and inequitable medical malpractice system, which exerts significant cost pressure on the program.” Exorbitant liability costs threaten the financial viability of our hospitals and nursing homes, and will make it very difficult for hospitals to sustain any further cuts to Medicaid funding. The flawed tort system also prompts the practice of “defensive medicine” to avoid being sued. Studies have shown that billions of dollars in health care costs are unnecessarily spent each year because of “defensive medicine,” such as unnecessary MRIs, CT scans and specialty referrals. A recent Health Affairs article concluded that defensive medicine costs the health care system $45.6 billion annually. A 2009 study by the Congressional Budget Office showed that medical liability reform would reduce the federal deficit by $54 billion over 10 years largely through reducing defensive medicine. And a 2008 study by the Massachusetts Medical Society indicated that $1.4 billion was spent annually in Massachusetts alone for defensive medicine. Moreover, New York spends another $130 million a year to provide excess medical malpractice insurance coverage beyond what a physician typically purchases. Public funding for such a program is necessary because of the excesses of New York’s medical liability adjudication system. Now is the time to reform this system. Medicaid and other health care spending is threatened by our state’s difficult fiscal situation. Before drastic cuts are made to programs that protect our neediest residents, the Legislature and Governor-elect Cuomo must enact comprehensive medical liability reform. Leah McCormack, M.D., is president of the Medical Society of the State of New York.
