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OK, Maybe It's Time For Medical Malpractice Reform

Like a lot of people, I played the New York Times' "Fix The Deficit" game yesterday. And one of the ways I chose to fix the deficit was to agree to a law limiting medical malpractice suits. Why? Not because it would save a ton of money from the deficit -- it wouldn't -- but because I was trying to build my own particular deficit-reduction program to be somewhat politically feasible. I figured that meant throwing a few bones to the right.

Today, however, I'm starting to think there are more important reasons to enact reform. Take this New York Times story:
"Large banks, hedge funds and private investors hungry for new and lucrative opportunities are bankrolling other people’s lawsuits, pumping hundreds of millions of dollars into medical malpractice claims, divorce battles and class actions against corporations — all in the hope of sharing in the potential winnings."
Yikes! The Times' deficit game yesterday warned that enacting malpractice reform would take away an incentive for doctors to avoid critical mistakes. And I can see the benefits of getting investors in on the side of small-time plaintiffs who might otherwise be overwhelmed by the vaster legal resources of the medical establishment.

But this story makes it seem that malpractice suits are really distorting the incentives; if the money people would rather invest in a lawsuit instead of (say) a new business that makes things or serve people, then things are out of wack. Time for a reconsideration.


KhabaLox said…
I think this might be another reflection of the problems caused by grossly unequal wealth distribution. With so much money concentrated in so few hands, it's hard to find good investments. As a result we had liquidity flood the mortgage resale market, which led to lots of bad loans and a housing crisis. Now it appears that all this extra money has found an investment in law suits. Of course, this is all supposition on my part, as I haven't looked into this for any evidence, but it's an interesting hypothesis at least.

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