CBO: Tort Reform Lowers Health Costs

The Congressional Budget Office says tort reform will result in the reduction of health care costs in both direct and indirect ways.

In a letter to Rep. Bruce Braley (D. – Iowa), the CBO cited CBO concluded that tort reform would lower costs directly, by reducing malpractice insurance premiums, settlements, and awards, and indirectly, by reducing “defensive medicine” practices by providers. Braley had written the CBO asking about the potential impact of tort reform on the quality of health care and on health outcomes.

Citing a number of recent studies, CBO upped its estimate of the impact of tort reform on overall health spending. “CBO currently estimates that the nation’s direct costs for medical malpractice—which consist of malpractice insurance premiums and settlements, awards, and legal and administrative costs not covered by insurance—would be reduced by about 10% (relative to the amounts under current law) if the common package of tort reforms was implemented nationwide. CBO’s previous estimate was that tort reform would lower malpractice costs nationwide by about 6%.”

The agency now estimates that enacting a package of tort reform proposals currently under consideration would reduce federal budget deficits by about $54 billion during the 2010–2019 period.