Obamacare has been passed with great fanfare, but many Americans, unsure how the massive government program will work for them, are taking to the streets voicing their protests. Personal injury lawyers, on the other hand, are drinking champagne and voicing their approval, because they know Obamacare will work well for them. The American Association for Justice (AAJ), formerly and more accurately called the Association of Trial Lawyers of America, is ecstatic that the health care bill lacks any provisions to protect doctors and hospitals from abusive lawsuits. One AAJ boss bragged about defeating tort-reform measures and blocking a cap on attorneys’ fees. Americans can thank the AAJ for thus explaining why health care is expensive and complicated now, and is certain to get more so under Obamacare, while lawyers’ profits are certain to rise. For a better path to reform, consider Alaska, a state that appreciates and welcomes doctors, instead of targeting them with predatory lawsuits. As the just-released U.S. Tort Liability Index: 2010 Report points out, Alaska has the sixth-lowest medical liability costs in the country, after controlling for the size of each state’s health care sector. In contrast, New York has the highest costs and alone accounted for more than a quarter of the nation’s total medical-liability insurance payments in 2008. States that have adopted limits on non-economic damage awards, as Alaska has, have 12 percent more physicians per capita than states without such caps. That is the conclusion of a study from the U.S. Department of Health and Human Services. Alaska has also worked hard to shield doctors from abusive lawsuits by adopting strong expert witness rules. Overall, the Index concludes that Alaska has the best tort climate in the country. Alaska has the second-lowest total monetary tort payouts of any state, controlling for the size of each state’s economy. Alaska’s tort costs are particularly low for businesses–another reason for entrepreneurs, as well as doctors, to locate here. The state also boasts the lowest relative tort litigation risks of any state. Alaska abounds in moose and bears, which can occasionally be dangerous. On the other hand, Alaska is free of any “judicial hellholes,” which are always dangerous and skewed to the benefit of rapacious personal injury lawyers. The state also doesn’t have huge outlier jury awards. Its tort caseload is third-lowest in the country and it’s not flooded with lawyers. Alaskans prefer the rule of law, rather than the rule of lawyers, as in other states. Alaska’s great tort climate is good for business. As the Index demonstrates, states with sound tort systems and balanced tort rules enjoy lower insurance premiums, increased employment and output, and higher individual incomes. A sound tort system also expands the tax base, yields greater innovation, and lowers health care costs while improving access to health care. According to another recent report published by the Pacific Research Institute, comprehensive lawsuit reform would save the country $191 billion annually in defensive medicine costs alone. Obamacare supporters talk a good game but ordinary people have grounds for concern. What is good for the profits and prestige of personal injury lawyers is not necessarily good for the American people. All states would do well to follow Alaska’s example and enact strong legal reforms to eliminate lawsuit abuse. — Lawrence J. McQuillan, Ph.D., is director of Business and Economic Studies at the California-based Pacific Research Institute. He is co-author with Hovannes Abramyan of the third edition of the U.S. Tort Liability Index, just released by PRI. Contact him at [email protected].
