The Republican candidate for governor believes in the power of tort reform.

At his campaign headquarters Wednesday, James “Duke” Aiona said: “I know tort reform has been a success in Texas and California. It has driven down costs of health care and brought physicians back to those states.”

To judge Aiona’s claim, we have to look at both Texas and California before and after tort reform and what effect, if any, it had on health-care costs and the number of physicians.

But first, a little background.

Tort Reform

In the United States, tort law is used as a means to give a plaintiff who has been injured an avenue to collect monetary damages from a defendant (a person, persons, or a business, etc.) if the injury was caused by negligence or some failure to exercise proper care on part of the defendant.

Tort reform generally means capping the amount of monetary damages a plaintiff might receive in such a lawsuit. It’s believed this will reduce the amount of medical tests some doctors request, lowering the total cost of care.

According to The Perryman Group, a Texas-based “economic and financial analysis firm,” the United States’ tort system is more expensive than similar international systems. It says: “The United States spends 2.2 percent of its Gross Domestic Product (GDP) on direct tort costs. Other advanced countries with viable market economies spend an average of 0.9% of GDP on direct tort costs. Since 1950, tort cost growth has exceeded GDP growth by an average of two to three percentage points.”

Advocates of tort reform say that current tort law is one of the reasons that health-care costs are rising. In another report by San Francisco-based Pacific Research Institute, it says: “tort reforms that eliminated unnecessary, defensive medicine would cut health care costs by $191 billion each year, enabling greater access to health care through more affordable health insurance.”

The Pacific report goes on to say that, “Increased health care costs due to defensive medicine have added 3.4 million Americans to the rolls of the uninsured. Compared to the insured, the uninsured tend to have higher mortality rates due to a lack of, or reduced rate of, certain types of care. The uninsured also are less productive members of the workforce because of absenteeism (fewer or shorter paid workdays resulting from poor health) and “presenteeism” (reduced productivity at work attributable to poor health).”

Texas

In the 1980s and early 1990s, Texas was known for the lack of fairness and balance in its civil justice system, according to the Perryman report.

The report said that during the 1990’s, a wrongful death case in Texas could be valued at $8 million, when other states averaged $1 million. It also said that between 1999 and 2003, that “medical insurance premiums for many Texas doctors doubled.”

In 1995, Texas introduced tort reform legislation, addressing limits on punitive damages and medical malpractice reform.

In 2003, the Texas Legislature passed more reforms.

The Perryman report found that “Following enactment of these measures, medical malpractice insurance rates stabilized and many doctors saw substantial rate reductions — some by almost 50 percent. These decreases represented a much-needed response to a situation that had reached near-crisis proportions.”

The state did see an increase in doctors as well. The state’s ranking in physicians per capita improved from 48th in 2001 to 42nd in 2005, the report said, with more doctors joining the Texas Medical Board after reform than in the years before it.

Clearly, tort reform helped doctors in Texas and the number of new doctors in the state rose. But what about health-care costs for patients?

On this point, the benefits of tort reform were less clear.

According to a report, entitled “Shifting Ground: Changes in Employer-Sponsored Health Insurance,” released by the Robert Wood Johnson Foundation, Texas patient premiums have risen despite the changes to tort law.

Between 1998 and 2003, the “Average total single premium (in dollars) per enrolled employee at private-sector establishments that offer health insurance” rose by more than 44 percent in Texas, Table 1 of the report says. The average premiums went from $2,355 in 1998 to $3,400 in 2003.

The Houston Chronicle reported that between 2001 and 2005, premiums rose 40 percent and that Texas ranked third among all states in premium percentage increase over the four-year span.

Would premium rates have been higher if tort reform wasn’t introduced? Possibly. But to say, as Aiona does, that tort reform drove down the cost of health care isn’t necessarily accurate. It may have acted as a buffer to keep costs from going even higher, but it certainly didn’t decrease them.

California

To learn about California’s shrinking physician work force during the 1990’s and early 2000’s, this 2001 article from the Campbell Reporter is a good source. To learn more about the sharp increase in health-care costs in the state, we’d recommend this University of California article.

California adopted tort reform measures, known as MICRA, in 1975. The state imposed caps on victim’s compensation for noneconomic damages and attorney contingency fees, according to a state report by Jerome Harleston.

Did any of these measures affect health-care costs or physician employment?

Yes, according to California Medical Association spokesman Andrew LaMar.

Because of that legislation, “our medical malpractice rates are significantly lower, about one-third what they are in Florida or New York, places that don’t have similar types of law,” LaMar said. “And we do know that the cost of medical malpractice insurance is certainly one component of the cost of health care and when you take that out, you make health care more affordable for everybody else.”

LaMar said that “increasing the amount of non-economic damages allowed under MICRA from $250,000 to $500,000, would raise health care costs in California by at least $7.9 billion annually, according to a 2008 report by California’s former nonpartisan legislative analyst. That translates into $1,032 annually for a family of four.”

Regarding physician employment, LaMar said: “Not only is it easier for physicians to afford to practice here in California, even though we have higher cost-of-living costs, but there is a direct impact on, if you have more physicians that can practice here and see more patients for less cost, then that just means that more people get to see a doctor. That’s more access.”

LaMar also cited a June 2005 report from the Journal of the American Medical Association, saying that “states such as California with lower liability premiums have more doctors per capita, including surgeons and specialists.”

But what about the implication Aiona makes? Would tort reform be as effective in Hawaii as it was in California? And, at least when it came to doctor employment, Texas?

Hawaii

According to a report, “Analysis of Medical Malpractice Reforms for the Insurance Division of the State of Hawaii,” by Martin M. Simons, tort reform could have a positive effect in Hawaii.

Simons actually uses both Texas and California as examples of how tort reform can help with insurance premiums.

He says that, “Based on studies and comparable data on reforms in other states and the limited information in Hawaii, the typical medical liability reforms would result in estimated reductions of between 12 and 18% in medical malpractice premiums in Hawaii. Care should be taken to evaluate each insurer’s financial condition and provide an exception from application of any automatic rate reduction that might force the insurer into insolvency.”

As for the doctor issue, the Hawaii Medical Association had no statistics.