Saturday, March 12, 2005

Political Malpractice

The administration's position on medical malpractice awards is thoroughly punctured. Be sure to read the section on the economy just below, too.

According to the CBO, there is "no statistically significant difference in per capita health care spending between states with and without limits on malpractice torts."


Blogger Management said...

Dick Cheney, Insurance Salesman

Speaking at the Medical College of Ohio in Toledo yesterday, Vice President Cheney called for a cap on medical malpractice awards. But instead of shilling for the insurance industry, Cheney's time would have been better spent in Ohio reviewing this fact sheet on malpractice from the Ohio Universal Health Care Network. As it documents, the "solution" proposed by the White House is really designed to take the heat off the insurance industry that is fueling the problem, and bankrolling the Bush campaign. As other studies document, malpractice caps do little – if anything – to reduce doctors' and patients' insurance rates. Insurance industry simply pocket any money saved. One recent study by the Congressional Budget Office found that the benefits of capping malpractice would be "weak" and "inconclusive." Meanwhile, such reforms would "undermine incentives for safety," while making it "harder for some patients with legitimate but difficult claims to find legal representation."

NO LINK BETWEEN CAPS AND PREMIUMS: Vice President Cheney would have Americans believe there is a direct link between the insurance premiums doctors pay and rising health-care costs. Not so. Last year, Weiss Ratings, Inc., an independent financial services analysis company, issued a comprehensive study showing that in 19 states with malpractice caps, physicians suffered a 48.2 percent jump in their premiums. Meanwhile, in 32 states without caps, premiums rose by only 35.9 percent. In other words, there is no connection between caps and premium rates. Instead, the premium problem comes from insurance industry pricing practices that gouge doctors. While malpractice payouts actually went down by 8.2 percent between 2001 and 2002, there was no corresponding decrease in doctors' premiums, meaning the insurance industry pocketed the difference. The Des Moines Register points out, "There's simply no correlation between lawsuits and insurance rates. Rather, insurance rates are tied to the climate of the stock and bond market, where insurance companies invest much of their money."

CALIFORNIA CASE STUDY: The state of California put medical malpractice caps in place in 1975. A 1993 study of medical malpractice insurance in California showed the caps had "done little more than enrich California malpractice insurers with excessive profits, at the expense of malpractice victims." According to a study released in California yesterday, damage caps now come at the expense of the most gravely injured.

GETTING WHAT IT PAID FOR: Why won't President Bush and Vice President Cheney address the real issue of insurance reform? The insurance industry has paid a pretty penny to protect its interests. Since 2000, the industry has donated over $67 million to President Bush and his allies in Congress, twice as much as they've contributed on the other side of the aisle.

CBO PUTS IT IN PERSPECTIVE: The Congressional Budget Office (CBO) this year found that "even large savings in premiums can have only a small direct impact on health care spending--private or governmental--because malpractice costs account for less than 2% of that spending." In fact, an analysis by the CBO shows capping Medicare malpractice would benefit physicians and doctors, but would reduce private health insurance premiums a measly 0.4 percent. Want proof? According to the CBO, there is "no statistically significant difference in per capita health care spending between states with and without limits on malpractice torts."

DEFENSIVE MEDICINE DEFENSE: The White House blames an increase in health care costs on the defensive medicine doctors practice. It's a strategy, the administration says, doctors employ to protect themselves from lawsuits. Not so, said the CBO report. Instead, ordering more expensive tests "may be motivated less by liability concerns than by the income it generates for physicians."

DOCTORS NOT DRIVEN OUT: The administration has often claimed that recovery caps were also necessary because "lawsuits are driving docs out of the practice, which means there's less availability." While there are isolated markets with problems, a report by the General Accountability Office found that nationally, "reductions in supply by health care providers could not be substantiated or did not widely affect access to health care." In fact, in Pennsylvania and West Virginia – two of the 19 states supposedly in a "full-blown liability crisis," the number of doctors per capita has actually gone up over the past six years, according to the GAO. Bob Herbert of The New York Times took a look last month at how the Bush administration is cooking up the myth of a crisis.

1:43 AM  
Blogger Management said...

Hourly Wages Keep Falling

A major indicator of economic growth contradicts Bush administration claims the economy is "moving in the right direction" and paints a troubling picture of the supposed Bush "recovery." Despite gains in productivity and corporate profits, Sunday's New York Times reported, "The amount of money workers receive in their paychecks is failing to keep up with inflation." According to the nonpartisan Economic Policy Institute (EPI), "real hourly and weekly earnings have fallen for six out of the last seven months," with those averages dipping sharply in June. (The American Progress looks at whether much of the "job boom" is just hype.) The Bush administration claims its economic policies are "expanding the pie," but EPI senior economist Jared Bernstein, asks, "where are the slices going?" Indeed, it seems like "Everything really is going up — gas prices, corporate profits, soda pop prices, gross domestic product, medical prices, household debt, milk prices — except your salary." As the Wall Street Journal points out this morning, the economic "recovery" is tilting to the wealthy in America, with lower-income Americans still feeling the squeeze.

JUNE SWOON: Last Friday, four days after Vice President Cheney informed Americans that "wages have been rising," the Bureau of Labor Statistics "reported that hourly earnings of production workers - nonmanagement workers ranging from nurses and teachers to hamburger flippers and assembly-line workers - fell 1.1 percent in June, after accounting for inflation. The June drop, the steepest decline since the depths of recession in mid-1991," represents the second straight month there has been a significant decline. Real hourly earnings fell 0.8 percent in May.

DOWNTURN COULD STALL ECONOMIC GROWTH: Despite continued job growth, the downturn in wages could "put a dent in the prospects for economic growth," because ordinary workers might not be able "to spend money at a healthy clip, undermining one of the pillars of the expansion so far." The NYT reports, "the current slide in earnings is a big blow for the lower middle class. Moreover, the absence of lower income households could also weigh on overall economic growth." Bush Commerce Secretary Donald Evans ignored the unpleasant statistics in a speech last week, exhorting Americans to be more "optimistic," and stating, without any evidence, that Bush's economic vision "could bring the strongest economic performance any of us has ever seen."

JOBLESS RECOVERY: EPI's study shows the "first and most important factor" contributing to stagnating wages "is the lingering effect of the formerly jobless recovery." Though employment has grown recently, so many jobs have been lost since Bush took office – we're still 1.2 million jobs short of peak numbers in March 2001 – that considerable "slack" remains in the labor market. The June 2004 unemployment rate is 5.6 percent, the very same rate it was in November 2001, when the current recovery began. Much of the "slack" isn't accurately conveyed by data because unemployment statistics do not properly explain "the shortfall of jobs that has built up over the last three years." According to BLS statistics, since June 2000, "the number of adults considered 'not in the labor force' - those who don't have jobs and are not looking for them - has grown by about 4.4 million, to 66.6 million." That means unemployment figures (8.2 million Americans) capture less than two-thirds of the picture. Overall, the NYT reports, "the work force participation rate has dropped to 82.8 percent…the lowest rate since 1987." (The upside-down economy takes a bite out of middle-class wallets; see this American Progress backgrounder for more.)

MORE McJOBS: President Bush says "Higher growth and higher productivity are leading to better-paying jobs across America," but once again his claim is not backed up by the facts. Economists indicate growth has occurred in "largely lower-paying jobs," whose substandard quality "appears to be putting downward pressure on wage growth." And Bloomberg reports Wall Street is beginning to take notice. David A. Rosenberg, chief North American economist at Merrill Lynch, wrote that "The vast majority of net new jobs created have been in the low-wage sectors of the economy, and income growth has been disappointing." Stephen S. Roach, chief economist at Morgan Stanley, reached a similar conclusion: "While there has been some improvement on the hiring front in recent months, the quality of such job-creation has been decidedly subpar…Unless that changes, the risks to a sustainable economic recovery will only intensify."

1:51 AM  

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